ConDig (6-Mar–24) Moderating mortgage rates and a lack of existing inventory are breathing life into the single-family home market, according to the latest findings from the National Association of Home Builders (NAHB) Home Building Geography Index (HBGI) for the fourth quarter of 2023.

Year-over-year growth rates for many single-family markets have increased from the first quarter of 2023 through the last three months of the year, with only micro counties having a lower growth rate in the fourth quarter among all markets compared to the first quarter.

Breaking down the nation’s seven metro and county areas, the fourth quarter HBGI shows the following market shares in single-family home building:

• 16.0% in large metro core counties
• 25.0% in large metro suburban counties
• 9.6% in large metro outlying counties
• 28.7% in small metro core counties
• 10.0% in small metro outlying areas
• 6.5% in micro counties
• 4.2% in non-metro/micro counties

In the multifamily sector, growth rates were negative or holding steady in the nation’s largest metro and suburban counties, while growth rates exhibited the strongest readings in lower density areas, the NAHB said. 

However, new data on overall production in coastal areas shows that single-family home building is holding steady while multifamily is falling.

“While all urban, rural, metro and county area single-family markets experienced double-digit production declines in the third quarter, construction began to turn the corner in the final quarter of the year,” said NAHB chairman Carl Harris.

“Four out of the seven markets had declines of less than 5% while one market—small, metro outlying counties—grew at a modest 0.4% rate. This positive trend is due in large part to moderating interest rates and the mortgage ‘lock-in’ effect that is dissuading many home owners with low mortgage rates from listing their homes.”