12/03/2019 | News release | Distributed by Public on 12/03/2019 09:02
The majority of single-family and multifamily housing production in the nation is occurring in counties with the greatest concentration of millennials. However, in a warning sign that the housing affordability crisis persists and more construction is needed, the pace of housing production in areas with the greatest concentration of millennials lags the rest of the nation, according to the latest quarterly NAHB Home Building Geography Index (HBGI).
The third quarterly release of the HBGI sheds new light on the housing market by focusing on where millennials live. 'Millennial counties' are defined as geographic areas where at least 26% of the population consists of this growing demographic group. These millennial counties are diverse, representing major metro areas including several California markets, Seattle, Portland, Boston and Washington, D.C., as well as more rural counties in places such as Ohio, Kansas and Missouri.
The HBGI found that those counties with elevated millennial shares account for 62% of the entire U.S. population. These counties also account for 59% of single-family home building nationwide.
'On the surface, these numbers look similar, but you would expect the single-family construction share to be higher in millennial intensive areas, which tend to feature greater amounts of household formation and population growth that require additional housing,' said NAHB Chief Economist Robert Dietz.
'The HBGI highlights the ongoing challenge of housing supply, particularly for younger households seeking affordable rental housing or attempting to gain a toe-hold on the homeownership ladder,' said NAHB Chairman Greg Ugalde, a home builder and developer from Torrington, Conn. 'While counties that have greater concentrations of millennials are where most of the single-family and multifamily construction in the U.S. is occurring, those same areas have recently seen relatively weaker growth rates for home construction.'
'The new NAHB HBGI data shows two consecutive quarters of declines for single-family construction in counties with larger numbers of millennials, the very areas that most need additional home construction,' said Dietz. 'These localities are more acutely affected by supply-side constraints due to the greater demand for inventory resulting from the relatively younger population that resides there.'
Meanwhile, multifamily construction in millennial counties - which accounts for 80% of all apartment activity nationwide - picked up in the third quarter, though the improved growth rate was slower than the nationwide pace. 'The outsized concentration of multifamily construction in areas with a large proportion of millennials is not a surprise, but it is also a reminder of the mismatch between housing wants and housing availability that is challenging the for-sale market,' Dietz noted.
The HBGI is a quarterly measurement of building conditions across the country and uses county-level information about single- and multifamily permits to gauge housing construction growth in various urban and rural regions.
Other findings in the third quarter HBGI: