Construction is strongest in Millennial areas, but growth in these areas has begun to lag, according to a report from the National Association of Home Builders.
The majority of single-family and multifamily housing production in the U.S. is occurring in counties with the greatest concentration of Millennials, NAHB’s report said. However, concerns are beginning to arise as the pace of housing production in these areas lags the rest of the nation, according to NAHB’s Home Building Geography Index.
And there have been two consecutive quarters of declines in the second and third quarters this year for single-family construction in Millennial areas.
“The HBGI highlights the ongoing challenge of housing supply, particularly for younger households seeking affordable rental housing or attempting to gain a toe-hold on the homeownership ladder,” NAHB Chairman Greg Ugalde said. “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.”
Millennial counties, or geographical areas where at least 26% of the population consists of Millennials, are prominent in several California markets, Seattle, Portland, Bosting and Washington D.C., as well as several rural counties in states like 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,” NAHB Chief Economist Robert Dietz said.
But despite these slowdowns, a recent report from the National Association of Realtors shows that a housing market stymied by supply shortages will get relief next year from homebuilders.
In one sign that builders are beginning to construct more entry-level homes, the share of new-home mortgage financing backed by the Federal Housing Administration rose to 19% in 2019’s second quarter, a six-year high, according to Commerce Department data.