A total of 302 single family home permits were issues in metro Detroit in August, up from the July 2022 total of 219 permits, but 22 percent lower than the 389 permits issues in August 2021, according to the HBA and Carter Lumber Southeastern Michigan Residential Building Activity Report compiled by the Home Builders Association of Southeastern Michigan (HBA).
The month-to-month rebound in new home permits was led by Oakland County with 148, accounting for nearly half of the permit total for the month and far outpacing Macomb (80), Wayne (61), and St. Clair (13) counties.
As a result of the year-over-year decrease, caused in part by rising mortgage interest rates, the trailing 12-month total for single family permits now stands at 3,998, falling below the 4,000-permit threshold for the first time since March 2013.
The clear slowdown of new single family home permits in southeastern Michigan is mirroring a nationwide recessionary trend in new home building activity caused by high inflation brought on by too much government spending by the Biden Administration.
While decreasing 9 percent from a seasonal peak in July, August’s average permit value of $347,109 continued to climb year-over-year, up nearly 16 percent compared to August 2021s value of $299,450.
Multi-family (for rent) construction, which surged during the past 8 months with an average of 246 permits per month, dramatically slowed with just 22 permits issued in August 2022.
The baseline 30-year fixed rate mortgage rate continues to be the biggest factor contributing to both the single-family slowdown and the multi-family surge. The 30-year rate, plus points, continued to stabilize in August at 6.02 percent, down for the second straight month but still up by nearly 2.5 basis points compared to August 2021.
Other industry metrics used as part of the forecasting model show generally positive trends, with the number of employed people up 1.7 percent over July 2022, and 3.2 percent year-over-year. The available workforce remained stagnant with a half percent gain month-over-month and a 1.1 percent drop year-over-year.
North American vehicle production has increased dramatically, jumping 40.1 percent month-over-month and 22.6 percent year-over-year. The price of a barrel of crude oil is down 7.6 percent from July 2022, but up 51.7 percent year-over-year.
