Welcome to the exurbs: remote areas just beyond the more affluent suburbs that have seen a wave of activity from builders and home shoppers.

According to a recent report by the National Association of Home Builders, the exurbs were the only regions that saw an annual increase in single-family permits in the first quarter of 2019.

Posting a 1.6% year-over-year gain, the exurbs are home to just 9% of the nation’s single-family construction. But while this might not seem like much, its share is growing – a fact that some analysts say is raising red flags.

Why? The last time the exurbs saw activity increase was during the housing boom, when speculators got a bit over-excited about the opportunity to make the big bucks by flipping homes on the cheap. But when the bubble burst, these areas were largely abandoned, and builders were left deep in the red.

A renewed surge of activity in exurban areas is a key indicator of a general lack of affordability that is plaguing the housing market.

“A shortage of buildable and affordable lots is forcing builders to increasingly look further outside of suburban and metropolitan areas to find cheaper land that provides more building opportunities,” explained NAHB Chairman Greg Ugalde.

NAHB Chief Economist Robert Dietz said the data highlights the fact that housing costs are increasing at a faster pace in large metro suburban counties.

“Supply-side issues that are hurting affordability and raising costs for builders include excessive regulations, labor shortages, rising material costs and a dearth of buildable lots in mid- to high population centers,” Dietz said.

 

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