Most Home Building in Millennial Areas, But Pace Lags Rest of Nation

December 4th, 2019 by Editor

The majority of single-family and multifamily housing production in the nation is occurring in counties with the greatest concentration of millennials, according to the latest quarterly National Association of Home Builders (NAHB) Home Building Geography Index (HBGI). However, in a warning sign that the housing affordability crisis persists and more construction is needed, the pace of housing production in areas with the greatest concentration of millennials lags the rest of the nation.

“While counties that have greater concentrations of millennials are where most of the single-family and multifamily construction in the U.S. is occurring, those same areas have recently seen relatively weaker growth rates for home construction,” says NAHB chairman Greg Ugalde, a home builder and developer from Torrington, Conn.

The third quarterly release of the HBGI sheds new light on the housing market by focusing on where millennials live. “Millennial counties” are defined as geographic areas where at least 26% of the population consists of this growing demographic group. These millennial counties represent major metro areas including several California markets, Seattle, Portland, Boston, and Washington, D.C., as well as more rural counties in places such as Ohio, Kansas and Missouri.

The HBGI found that those counties with elevated millennial shares account for 62% of the entire U.S. population. These counties also account for 59% of single-family home building nationwide.

“On the surface, these numbers look similar, but you would expect the single-family construction share to be higher in millennial intensive areas, which tend to feature greater amounts of household formation and population growth that require additional housing,” says NAHB chief economist Robert Dietz.

Meanwhile, multifamily construction in millennial counties—which accounts for 80% of all apartment activity nationwide—picked up in the third quarter, though the improved growth rate was slower than the nationwide pace.

“The outsized concentration of multifamily construction in areas with a large proportion of millennials is not a surprise, but it is also a reminder of the mismatch between housing wants and housing availability that is challenging the for-sale market,” Dietz noted.

The HBGI is a quarterly measurement of building conditions across the country and uses county-level information about single- and multifamily permits to gauge housing construction growth in various urban and rural regions.

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