Homebuilding growth rates lag in millennial areas
Most U.S. construction takes place in counties with millennial concentrations, but the rate that new homes are built in these regions is relatively slower than it is elsewhere.
"The growth rate for these areas have been lagging the rest of the nation in recent quarters, suggesting a possible spatial mismatch between housing demand and housing supply," Litic Murali, an economist at the National Association of Home Builders, said in a report released Tuesday.
The top 25 counties with significant millennial concentrations represent 62% of the U.S. population. These counties also constitute 59% of single-family and 80% of multifamily development.
But between July and September, the four-quarter moving average for year-over-year single-family construction growth rates in millennial areas was negative-2.4%, compared to negative-1.4% for counties without significant concentrations of millennials.
For multifamily construction in millennial areas, the four-quarter moving average for growth rates was 6.5%, as compared to 16.8% in other regions. Millennials tend to be more concentrated in urban areas dominated by apartment housing.
"Single-family home construction growth has been generally lower in millennial-intensive counties compared to the rest of the nation — the opposite of what future housing demand requires," Murali said in the report. "With respect to multifamily development in millennial-intensive counties, apartment construction has been relatively flat since 2017, while only picking up in the most recent quarter."
Counties where a minimum 26% of the population was born between 1981 and 1997 are considered areas containing significant concentrations of millennials in the research, and the study is based on an analysis of the NAHB's third-quarter Home Building Geography Index.