Metro Detroit Single-family Home Permits Drop in July

Residential permit data compiled by the Home Builders Association of Southeastern Michigan (HBA) and reported in the HBA/Carter Lumber Southeastern Michigan Residential Building Activity Report shows a total of 361 single-family home permits were issued in Macomb, Oakland, St. Clair, and Wayne counties in July — 23 percent lower than the revised total of 469 for July 2020.
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a bungalo house with a walkway
Fewer single-family home permits were issued in southeastern Michigan last July than this year according to the Home Builders Association of Southeastern Michigan. // Stock Photo

Residential permit data compiled by the Home Builders Association of Southeastern Michigan (HBA) and reported in the HBA/Carter Lumber Southeastern Michigan Residential Building Activity Report shows a total of 361 single-family home permits were issued in Macomb, Oakland, St. Clair, and Wayne counties in July — 23 percent lower than the revised total of 469 for July 2020.

“Our econometric model forecast 364 permits for July 2021, based on various factors in place in December 2020,” says Michael Stoskopf, CEO of the HBA. “While pleased with the overall accuracy of our model, we clearly would like to see many more homes being built than we are currently seeing.”

Despite the lower than desired amount of new builds, July marks the 14th consecutive month with permits at or above 300, exceeding the previous streak of 13 months that ended with the start of the pandemic response in Michigan in March 2020. It is the longest streak of over 300 permits dating back to 2006 and earlier, when new home permits activity was well above the threshold year-round.

Supply chain issues affecting delivery schedules and rising prices are part of what’s driving the decrease, while existing home sales hit their highest level since before the Great Recession in June 2021. This abnormal spike could mean new home construction demand will increase going forward.

Industry metrics used by the HBA to analyze the market show employment is up 13.4 percent from this time last year and 0.2 percent from last month, while the workforce is up a half percent from last month and down 3.3 percent form this time last year, according to the Bureau of Labor Standards.

Ward’s Automotive shows North American vehicle production is down 9.2 percent from a month ago and 22.7 percent from last year, due in large part to a shortage of computer chips. Crude oil prices are up 17.7 percent from last month, and 80.6 percent year-over-year.

All these factors, coupled with single-family home sale prices rising 13.9 percent year-over-year, and single-family permit value rising 10.2 percent, contributed to the lower number of issued permits.

“Generally, as existing home sales pace depletes available inventory, we see buyers turn to new home product,” says Stoskopf. ”Presuming industry supply chain issues moderate over time, as we are already seeing in lumber manufacturing and prices, we could see an uptick in the number of permits issued moving forward. At this point, the driving economic factor is the lower number of people employed (down 7 percent compared to pre-pandemic). Simply put, you likely can’t buy a house if you don’t have a job.”

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