Hamilton Herald Masthead

Editorial


Front Page - Friday, September 30, 2022

Home builders: Smaller market housing growth continues to rise




You’ve probably noticed Chattanooga and surrounding smaller cities are experiencing a growth surge.

New findings from the National Association of Home Builders Home Building Geography Index show a shift in homebuilding activity during the past 30 months, with notable slowing in large metro urban areas as a result of COVID-19 migration.

Declines in housing affordability in high-cost and highly regulated markets followed as interest rates increased.

“The geography of home building has shifted over the last two and half years, with more single-family and multifamily construction occurring in lower density markets,” says NAHB Chief Economist Robert Dietz.

“This shift was first caused by the initial impact of coronavirus on housing demand, which favored lower density neighborhoods. The shift continued in recent months due to housing affordability conditions that are causing both prospective renters and buyers to expand their geographic search for housing, aided by hybrid work patterns that allow for a combination of remote and office work.”

Looking at the last 12 months, single-family production has slowed in all regional submarkets, both large and small, due to ongoing building material production bottlenecks, construction labor shortages and the Federal Reserve’s tightening monetary policy.

The HBGI index shows that the market share for single-family home building in large metro suburbs has fallen from 44.5% to 41.6% from 2019 to the second quarter of 2022.

In contrast, single-family home building in outer suburbs in large and medium-sized metros has expanded from 17.4% to 19% during the same period. This trend holds true in the least densely populated regional markets. From the fourth quarter of 2019 to the second quarter of 2022, the single-family home building market share in small metro core counties increased to 29% from 28.8%.

In rural areas, which represent non-metro and micro counties, the home building share rose to 10.4% from 9.4%. With natural beauty, outdoor activities and a thriving downtown scene, it makes sense that there’s a shift from larger cities to the likes of Chattanooga and the surrounding suburbs.

If you or someone you know is looking to move or build in our area, the HBAGC membership directory at www.HBAGC.net is a great place to find qualified, trusted professionals to get you started on your journey.