The National Association of Home Builders reported in its Home Building Geography Index (HBGI) that single-family home building in rural areas grew by 1.1% over the last four quarters in Q3 2019, compared to a 4.3% decline in suburban areas of large metros.
Rural areas posted a year-over-year increase of 7% in homebuilding.
“This contrast between the best and the worst performing regions for single-family construction illustrates the spatial mismatch between housing supply and housing demand,” the NAHB says. “As millennials age, their ability to afford housing in more expensive areas may improve as incomes expand, but until that occurs, drive-until-you-qualify may be a required strategy for many entry-level home buyers.”
However, many millennials will choose to rent longer, lending to a higher density of people in core counties of both large and small metros. The NAHB reports there are more than 90% of millennial counties in large metros.
HBGI data shows that 79 of the 199 counties that are suburban counties of large metro areas are also millennial-dense counties.
Suburban areas saw single-family homebuilding fall 4.3% over the past four quarters and drop 0.3% year-over-year.
The Census Bureau reported in December that residential construction spending fell 0.9% to $508.2 billion in October from September’s $512.6 billion.
New single-family housing construction rose 1.6% from September to $279 million but is down 3.1% year-over-year from October 2018’s $288 million.
Single-family spending has been increasing month-over-month from June 2019 when residential spending was $264 million.
The National Association of Home Builders reported last month the average single-family lot price reached a new high in 2018, with half of the lots selling at or above $49,500.
New England had the most expensive lots in the nation, with half of all sold single-family homes had lot values higher than $140,000.
“New England is known for strict local zoning regulations that often require very low densities. Therefore, it is not surprising that typical single-family spec homes started in New England are built on some of the largest and most expensive lots in the nation,” said the NAHB.