The National Association of Home Builders (NAHB) recently released its Home Builders Geography Index (HBGI) report for Q1 2025. It showed a shift in multifamily permit activity from more densely populated areas to less densely populated areas.
Sorting the data
The NAHB report looks at building permit data by county. It categorizes the counties by population density and location and sorts each county into one of 7 categories. Those categories are: Large Metro – Core County, Large Metro- Suburban County, Large Metro – Outlying Areas, Small Metro – Core County, Small Metro – Outlying County, Micro County, Non-Metro/Micro County.
The HBGI tracks permit data based on 4-quarter moving averages without seasonal adjustment and looks at the share of total permits in each geographic category as well as the growth rate in the number of permits.
Looking at market share
The first chart shows how the market share of each of the geographic categories has shifted over time. The chart shows that the large metro share of multifamily permits has been decreasing. The combined share of large metro core, large metro suburban and large metro outlying was as high as 74.3 percent in Q1 2016, but dropped to only 65.9 percent in Q1 2025. Over that same time period, the combined share of small metro core and small metro outlying areas has risen from 22.0 percent to 29.3 percent of permits.
The next chart shows the change in multifamily permit market share for each of the geographic categories compared to its average level in the 2016 to 2018 period. It shows that the outlying counties of small metro areas have seen the greatest relative growth, with an increase of 74 percent. This is followed by the outlying counties of large metro areas with growth of 65.4 percent. The greatest percentage decline in multifamily permit market share occurred in the core counties of large metros, with a fall of 16.7 percent, followed by the suburban counties of large metros, with a fall of 6.6 percent.
Absolute growth
The last chart shows the 4-quarter moving average of the not-seasonally-adjusted year-over-year rate of growth in multifamily permits since 2016. While there was a lot of variation in growth rates in 2016 and 2017, the growth rates seemed to become more synchronized after mid-2020. All regions showed declining numbers of multifamily permits late in that year. This was followed by growth in all regions in 2021 and 2022 and declines in most regions in 2023 to mid-2024. However, over the last few quarters, the growth rates have diverged again with growth rates as high as 33.2 percent in outlying areas of large metros and 29.3 percent in the core counties of small metros. By contrast Q1 2025 saw year-over-year declines in permits of 17.6 percent in the core counties of large metros and of 6.7 percent in suburban counties of large metros.
The full HBGI report also covers shifts in single-family housing permits. It can be found here.
