Laugarbakki village is situated in the west Húnaþing district, on the eastern side of Miðfjarðará river, and close to highway 1. The first house to be built at Laugarbakki was erected in 1933. In 1970 a large boarding school was built, which is now used during the summer months to house the Edda Summer Hotel.
There is a shop, a swimming pool (which has been converted into relaxing hotpots) and a community centre which is popular as a venue for family gatherings during summer. From Laugarbakki it is only 7 km to Hvammstangi.