Metro Detroit Housing Permits Stumble as Mortgage Rates Rise

A total of 212 single family home permits were issued in metro Detroit in October, down from the September 2022 total of 287 permits, and falling short of the forecast of 284 permits, according to the latest HBA and Carter Lumber Southeastern Michigan Residential Building Activity Report compiled by the Home Builders Association of Southeastern Michigan (HBA).
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New home under construction with wood, trusses and supplies against blue sky
The amount of single family home permits issued in October 2022 fell well short of the forecasted 284 at 212. // Stock Photo

A total of 212 single family home permits were issued in metro Detroit in October, down from the September 2022 total of 287 permits, and falling short of the forecast of 284 permits, according to the latest HBA and Carter Lumber Southeastern Michigan Residential Building Activity Report compiled by the Home Builders Association of Southeastern Michigan (HBA).

October’s result marks the slowest October for SFH permits since 2010 (201), and was down more than 26 percent compared to the revised September 2022 total of 287 permits. The trailing 12-month total for SFH permits now stands at 3,793 and marks 17 consecutive months this metric has declined, falling 27 percent since June 2021 (5,187).

Multi-family construction slowed somewhat in October, adding 80 permits and bringing the year-to-date total to 2,139. As a result, 2022 is the best annual results for multi-family activity since October 1998 (4,179).

Mortgage rates continue to be the biggest factor contributing to the SFH slowdown, with the 30-year fixed rate, plus points, increasing to 7.7 percent in October. It is up by 3.93 basis points compared to October 2021 and at its highest level since March 2002 (7.71 percent).

Other econometric metrics the HBA uses in its forecast show mixed results besides mortgage rates. The number of employed is down 0.2 percent month-over-month and up 2 percent on the year, while the available workforce is down 0.4 percent and 0.6 percent month-over-month and year-over-year, respectively.

North American vehicle production was up 14.9 percent on the year and remained effectively stagnant month-over-month with a 0.1 percent drop. The price of crude oil per barrel is up 19.7 percent year-over-year but saw a large drop of 6.4 percent month-over-month.

The average value of an existing single family home sale was up 0.9 percent month-over-month and 2.8 percent year-over-year to $286,775. The average value of a new single-family permit saw a significant increase both month-over-month and year-over-year, up to $399,670, or 6.9 percent and 32 percent respectively.