Low-density regions experience surge in multifamily construction

Areas with lower population densities are experiencing an increase in multifamily construction for the first quarter of 2025, according to the Home Building Geography Index (HBGI) published by the National Association of Home Builders.

“The largest construction gains have been in low population density areas, with the combined market share for small metro outlying counties, micro counties, and non-metro/micro counties growing 2.2 percentage points from 7.8% to 10% between 1Q 2024 and 1Q 2025,” the HBGI says. The index tracks multifamily and single-family permits across seven U.S. geographies grouped by population density.

Multifamily construction jumped 29.3% in micro counties, 18.5% in small counties in outlying metro areas, and 3.7% in non-metro/micro counties. It also rose 33.2% in large metro outlying areas in the first quarter—the highest level since the second quarter of 2022, when it rose 71.8 percent.

By contrast, the multifamily market share of large metro core counties dropped 4.8 percentage points year-over-year. Most multifamily construction takes place in these areas.

The HBGI finding of growth in multifamily housing in regions outside city cores aligns with a recent analysis by Point2Homes, GlobeStreet reported. That report showed that growth of renter households in suburbs is outpacing their rate of increase in five of the 20 largest U.S. metros and that developers are expanding outward in the towns and suburbs surrounding city limits.