The nation’s — and homebuyers’ — needs for more home inventory and, ultimately, more affordable housing are driving growth in single-family home construction.
All U.S. geographic regions saw more of those houses being built last year, the National Association of Home Builders (NAHB) reported yesterday in its Home Building Geography Index (HGBI) for the fourth quarter of 2024.
The HBGI uses county-level information from building permits to gauge the status of housing construction. The index shows four consecutive quarters of single-family home construction growth across its seven key geographic area types.
Specifically, the HBGI breaks down the shares of single-family home building as:
- 16.1% in large metro core counties, where construction grew in Q4 2024 by 9.4%;
- 24.7% in large metro suburban counties, where construction grew in Q4 2024 by 7.3%;
- 9.4% in large metro outlying counties, where construction grew in Q4 2024 by 6.9%;
- 29.1% in small metro core counties, where construction grew in Q4 2024 by 10.3%;
- 10.0% in small metro outlying areas, where construction grew in Q4 2024 by 8.7%;
- 6.3% in micro counties, where construction grew in Q4 2024 by 5.7%; and
- 4.2% in non-metro/ micro counties, where construction grew in Q4 2024 by 4.8%.
Note that according to NAHB's analysis, the region type where construction is most concentrated, small metro core countries, also saw the largest bump up in construction growth at over 10%. The increase in home construction is helping narrow the gap between new and existing homes, National Mortgage Professional contributing writer Lew Sichelman recently wrote: "The traditional price gap between new and existing houses, once in the tens of thousands of dollars, has all but disappeared."
Single-family home construction “has been holding remarkably steady, despite elevated mortgage rates and tight lending standards for construction and development loans,” noted NAHB Chief Economist, Robert Dietz, in a release.
“Upside and downside risks will become clearer as the new year progresses,” Dietz added, citing a looser regulatory environment and tax cuts as potential construction growth drivers, along with tariffs that he stated “could dampen market momentum.”
If construction growth remains steadily positive, Federal Reserve rate cuts expected later this year “could help spur new construction and keep single-family home building at a more normalized pace,” NAHB predicted. The group calls that scenario likely.
Meanwhile, also on Tuesday, NAHB Chairman, Buddy Hughes, pointed to five headwinds — which he called “the five L’s” — that are placing pressure on builders: lending, labor, lumber, lots, and laws.
“Each one of these factors contributes to the rising cost in new homes,” according to NAHB. The organization argues for implementing policies to alleviate what it terms these “supply-side bottlenecks that are the main drivers of low housing supply and high home prices.”
