Single-Family Market Share Continued to Shift Away From Urban, Densely Populated Areas Last Year

By Elisa Fernández-Arias

In 2022, the single-family market share continued shifting away from densely populated, urban areas, reflecting a trend originating in the COVID-19 pandemic of families moving out of these areas.

Key Takeaways:

Single-family housing starts slowed last year, with the largest decrease, on a percentage basis, happening in the densest counties.
The trend of families moving out of areas that are urban and densely populated, ongoing since the start of the COVID-19 pandemic, is due to reasons such as affordability, proximity to family and more space.
Those in the K&B industry, especially construction pros, can strategize to address this shift, such as building single-family new builds in areas that are less densely populated.

If you’ve recently noticed fewer single-family housing starts in denser areas as compared to more rural ones, you aren’t alone. In the past year, there has been a shift, with fewer of them occurring in the densest counties.

In fact, while it’s true that single-family housing starts have experienced a slowdown in the last year, the largest decrease, on a percentage basis, was experienced in the densest counties because of high housing costs.

According to the National Association of Home Builders (NAHB), in Jesse Wade’s coverage of their release of the Home Building Geography Index (HBGI) for Q4 2022:

“Across the single-family market, the 4-quarter moving average of the year-over-year growth rate has fallen considerably from the fourth quarter of 2021. The largest decrease in the growth rate was in Large Metro – Outlying [Counties] which fell from 23.6% in the fourth quarter of 2021 to -12.1% in the fourth quarter of 2022. All markets had a positive growth rate in the fourth quarter of 2021 but only Micro [Counties] remained positive in the fourth quarter of 2022 at 6.8%.”

These numbers reflect a trend that started during the COVID-19 pandemic. Many families — for a variety of reasons, such as accommodating remote work or escaping expensive housing markets — are moving out of their homes in urban, densely-populated areas. This has led to a rise in single-family building within non-metro areas, small metros and areas outside of metros.

Looking forward, those in the K&B industry (especially those in construction) can create strategies to best serve their customers. For example, builders can focus on building single-family new builds in the less densely populated areas or work on different projects in cities and other densely populated areas.