A lack of existing inventory and pent-up demand is fueling single-family home construction, with permit growth occurring across the nation in the first quarter of 2024.
Total single-family permits across the U.S. in Q1 2024 were approximately 240,500, which is 23.8% higher than the amount seen in the first quarter last year (194,200), according to the National Association of Home Builders (NAHB). The growth rates for all regions tracked by the NAHB’s Home Building Geography Index (HBGI) were positive in the first quarter, with five of the seven posting double-digit gains.
Economists say that single-family and multi-family construction are headed in opposite directions across different regions.
“This is the first time since the inception of the HBGI that all tracked multifamily geographic areas registered negative permit growth rates,” commented NAHB Chairman Carl Harris, a custom home builder from Wichita, Kan.
The ample supply of new construction inventory paired with elevated homebuying costs has slowed down the construction of rental units, analysts say.
“The strength in single-family construction at the start of the year was particularly concentrated in higher density areas, as return-to-office trends lifted demand in inner suburbs,” said NAHB Chief Economist Robert Dietz. “This corresponds with other data indicating a gain for townhouse construction at the start of 2024. In contrast, the apartment construction slowdown is disproportionately affecting higher density markets, where high levels of construction inventory, elevated costs, and tight financing is impeding multifamily supply."
