Residential Construction Picks Up in Low-Density Areas

As construction costs rise and land continues to become more expensive, residential construction is increasingly shifting to low-density suburbs and outlying areas of cities. Although half of the U.S. population lives in the top 10% of high-density areas, single-family construction in these areas has declined, according to the National Association of Home Builders’ Eye On Housing blog. High-density counties accounted for nearly 40% of single-family construction in early 2018, but the market share dropped to 37.8% by early 2020 and further to 35.5% by early 2022. Since then, the share has stabilized at around 35.7% as of Q3 2024.

“The trend of construction expansion in lower density areas occurred prior to and during the Covid pandemic, as many households chose to move out of areas where population density was highest to take advantage of additional telecommuting flexibility and the ability to purchase larger homes in areas of the country where housing is more affordable,” said NAHB Chairman Carl Harris, a custom home builder from Wichita, Kan. “Single-family construction did continue to show growth across most HBGI geographic areas in the third quarter, albeit at a slower rate than compared to the same time period last year, even as mortgage rates remained high.” Read more