Economic Uncertainty Slows Single-Family Construction Across All Geographies

Single-family home construction declined across all geographic regions in the first quarter of 2026 due to economic uncertainty, high material costs and elevated interest rates, while multifamily construction showed growth in most areas, according to the latest findings from the National Association of Home Builders (NAHB) Home Building Geography Index (HBGI).

"Markets continue to shift single-family construction activity away from high-density population centers toward more affordable rural areas," said NAHB Chairman Bill Owens, a home builder and remodeler from Worthington, Ohio.

"Higher material and financing costs are acting as major headwinds to single-family production," said NAHB Chief Economist Robert Dietz. "And while builders continue to offer price cuts and incentives, ongoing affordability challenges are keeping many potential buyers on the sidelines. Meanwhile, multifamily markets have remained broadly resilient, but the same pressures weighing on the single-family sector could soon affect the multifamily market as well."

Nationwide single-family permits have slowed in the first quarter of 2026, with the sharpest declines occurring in large metro core counties-areas with the highest population densities. Core counties within large metro areas contracted 16.0% year-over-year on a four-quarter moving average basis, while compared to the previous quarter, this market deteriorated further by 3.2 percentage points. More broadly, single-family construction in non-rural areas, which includes counties in both small and large metros, declined 9.2%.

Large metro core counties, on average, shed 0.1 percentage points in market share every quarter for the past decade, with the pace of decline accelerating after the pandemic. This geography accounted for 14.7% of single-family permits in the first quarter, down 1.3 percentage points from a year earlier and 4.1 percentage points lower than a decade ago. A similar trend applies in large metro suburban counties where market share lost 3.3 percentage points over the past decade.

In contrast, gains have been distributed evenly across the remaining geographies. Outlying counties in small metros recorded the largest gain of 1.9 percentage points compared to a decade ago and an increase of 0.7 percentage points relative to the first quarter of 2025.

The first quarter HBGI shows the following market shares in single-family home building:

• 14.7% in large metro core counties
• 24.3% in large metro suburban counties
• 9.3% in large metro outlying counties
• 29.4% in small metro core counties
• 10.8% in small metro outlying areas
• 7.0% in micro counties
• 4.5% in non-metro/micro counties

Multifamily Construction Up Across the Nation

Multifamily construction expanded across all markets in the first quarter of 2026, except for outlying counties in large metros and micro counties. These two geographies appear to be normalizing after posting consistent growth throughout 2025.

In terms of multifamily market growth, large metro core counties posted the strongest gain in the first quarter at 20.8%, with activity picking up pace after returning to a positive growth rate in the last quarter of 2025. Multifamily construction in non-rural counties also experienced strong growth of 10.5% while growth in rural counties slowed considerably from 11.4% in the previous quarter to 1.8% in the first three months of this year.

The first quarter HBGI shows the following market shares in multifamily home building:

• 36.5% in large metro core counties
• 26.9% in large metro suburban counties
• 3.1% in large metro outlying counties
• 23.8% in small metro core counties
• 5.1% in small metro outlying areas
• 3.4% in micro counties
• 1.2% in non-metro/micro counties