Recent trends in U.S. housing construction highlight how single-family housing starts have declined while multifamily construction has grown—primarily in smaller and less densely populated markets—during the second quarter of 2025, according to the NAHB Home Building Geography Index (HBGI).
Single-Family Construction Declines
Single-family construction experienced declines in nearly every region during Q2 2025, signaling a soft housing market. The most significant percentage drop was 3.8% in large metro suburban counties, which historically account for most permit activity. NAHB Chairman Buddy Hughes attributes this trend to persistent housing affordability issues, high mortgage rates, shortages of skilled labor, and excessive regulatory costs, all of which are making it harder for builders to start or finish single-family homes. Policymakers are being urged to improve the climate for homebuilding by eliminating unnecessary regulations, reforming zoning rules, and promoting careers in skilled trades.
While all single-family market segments saw robust double-digit growth in 2024, the first two quarters of 2025 have been marked by declines and stagnation. Importantly, the only exception was micro counties, which posted a 1.8% gain—marking the fifth consecutive quarter of single-family construction growth in these very low-density areas. With growth slowing down especially in large metro areas, less densely populated markets witnessed notable market share gains, capturing the highest combined single-family share since Q1 2023: 50.2% in Q2 2025.
Multifamily Construction Growth
Multifamily construction showed significant resilience and growth, except in high-density areas, which saw continued declines. The largest increase was a 22.1% rise in small metro outlying counties. In contrast, large metro core counties posted a 12.3% drop, marking the ninth consecutive quarterly decrease in these dense urban centers. NAHB Chief Economist Robert Dietz notes that multifamily market conditions remain strong partly because high costs and affordability issues have made single-family homeownership unattainable for many households, boosting demand for multifamily units.
Construction dynamics in low-population density areas, where regulations and land costs are lower, are supporting multifamily sector growth. These favorable conditions, especially outside major urban cores, have contributed to the sector’s strong performance in 2025, even as high-density markets underperform.
Multifamily completions continue to hit quarterly highs, with new units steadily reaching the market. This heightened supply is expected to mitigate shelter inflation, which has been a primary driver of overall inflation rates. The cooling of housing costs could also increase the likelihood of Federal Reserve interest rate cuts later in 2025.
Driving Factors and Outlook
Overall, the U.S. housing market is seeing a geographic shift, with slower single-family production in large metro areas and increased multifamily output—especially in regions with lower population density. These patterns are directly tied to affordability constraints, labor shortages, and regulatory issues. Multifamily construction should remain robust as long as single-family affordability remains constrained and lower-density areas continue to offer favorable building conditions.
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