Multifamily Construction Shifts to Less Populous Areas: Demographic Trends, Capital, and Affordable Housing Drive Growth

According to the latest National Association of Home Builders Home Building Geography Index (HBGI) for the first quarter of 2025, released earlier this month, apartment growth is shifting to counties with lower population densities. The market share of apartment starts in large metro core counties has continued a long-term downward trend, falling from 45.1% in 2016 to a 35.5% share in 2025, the lowest level since the HBGI's inception.

HBGI is a quarterly measurement of building conditions across the country that uses county-level information about single-family and multifamily permits to gauge housing construction growth in various urban and rural geographies. NAHB Chief Economist Robert Dietz told Multifamily Dive that the HBGI has shown a significant drop in construction for large metro core counties, flat starts for large suburbs, growth for exurbs, solid growth for small metro core, and large percentage gains (although still small shares) for rural areas over the past nine years.

The movement of construction to less-dense areas is not just one catalyst behind the change. With a strong need for affordable and attainable housing, Dietz said that the "multifamily market is exhibiting strength in lower-cost areas where housing supply can more readily expand." Demographic trends are also a factor, with the percentage of renters age 30 or older at an all-time high of 72%, according to John Burns Research & Consulting. "The older renters want maybe more of a suburban life versus urban," said Eric Finnigan, vice president of demographics research at the Irvine, California-based firm.

Capital is also a major player in the drive to build further out. Greg Bonifield, founding partner of Charleston, South Carolina-based apartment developer Woodfield Development, sees equity chasing what he calls a "basis play" with other developers. "There are buckets of money out there that want to deploy into new construction if they can hit a certain basis per unit," Bonifield told Multifamily Dive. Land costs are one key element driving up costs, so it makes sense that developers would start moving to less dense areas where dirt is typically cheaper. "On the basis play, the further you go out, you can build a product at a lower cost, which is what a fair amount of capital is focused on doing," Bonifield said.

The following table shows the share of apartment starts by area:

SOURCE: NAHB

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