July’s residential home permits exceeded their forecast by more than 28 percent. The results are what would have been expected in a normal year based on pre-COVID-19 economic factors that were used to calculate the expected value for July.
Over the course of the month, a total of 367 single-family home permits were issued in Macomb, Oakland, St. Clair, and Wayne counties, according to the Home Builders Association of Southeastern Michigan. The forecast was 286 homes.
“There are a number of economic factors that are helping to drive the resurgence of new home permits since the pandemic effectively shut down all activity from late March through early May,” says Michael Stoskopf, CEO of the association. “At the forefront are historically low mortgage interest rates which are helping fuel both existing home sales and new home construction.
“The sales pace of existing homes in southeastern Michigan is resulting in lower inventories, which historically translates into new home construction, ultimately starting with the issuance of a permit. With nearly 200,000 people in southeastern Michigan returning to work, in just the month of June, there is seemingly renewed confidence in making the decision to buy a new home.”
North American vehicle production has also increased in June and July. It saw a jump of 9 percent from June to 1,275,743. This was an 11.9 percent increase from July 2019. This factor typically has a high correlation to increased permit activity, according to the association.
Moving forward, the association’s forecast follows normal seasonal trends. The association says new home permits may exceed forecasting to make up for lost production time in March, April, and early May.
The average new single-family permit value was $318,302, a 4.1 percent increase from the previous month and a 13.6 percent increase from the previous year. The average single-family home sale price was $260,174, a 7.6 percent increase month-over-month and a 9.9 percent increase year-over-year.
The number of people employed increased 14.4 percent from June to 1,572,232. However, this number was still an 18.3 percent drop from the previous year. The workforce increased to 1,918,055, a 6.2 percent increase from the previous month but a 4.7 percent drop from the year before.
Crude oil price per barrel increased 24.5 percent from June to $40.46. This is a 28.6 percent decrease from July 2019.
