Report: Metro Detroit New Home Permit Values Jump, Construction Falls

High mortgage rates and seasonal trends have led to a total of 139-single family home (SFH) permits issued in Macomb, Oakland, St. Clair, and Wayne counties in November 2022.
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new home construction of a house
New home construction continues to fall in metro Detroit despite prices for a new home permits rising significantly. // Stock Photo

High mortgage rates and seasonal trends have led to a total of 139-single family home (SFH) permits issued in Macomb, Oakland, St. Clair, and Wayne counties in November 2022.

The forecast was for 220 home starts, according to residential permit data compiled by the Home Builders Association of Southeastern Michigan in Bingham Farms and reported in the HBA/Carter Lumber Southeastern Michigan Residential Building Activity Report.

November was down 41 percent compared to the revised October 2022 total of 234 permits, and down nearly 57 percent compared to November 2021, which saw 322 permits issued.

Mortgage rates continue to be the biggest factor contributing to the housing slowdown. The 30-year fixed rate, plus points, retreated slightly to 7.58 percent in November. Still, it remains up by 3.81 basis points compared to November 2021, when it was at 3.77 percent.

Typically permits slow in November and December as colder weather and holidays impact residential construction activity. Not including pandemic-related lockdowns in 2020, November’s result marks the lowest monthly total for SFH permits since February 2011 when 109 were issued.

Contrary to the trend of a slow-down, the average SFH permit value of $488,547 jumped dramatically in November, up 19 percent over October 2022 and nearly 37 percent over November 2021.

HBA analysis indicates that custom home builders, with typically higher permit values, made up 75 percent share of the permits in November. Consider, the 2022 year-to-date Top 5 production builders were issued 34 permits in November at an average value of $389,382. In contrast, the remaining 105 permits issued averaged $520,657. The average price for existing homes slowed further, growing at 1.5 percent year-over-year to $283,040.

Other metrics used to forecast permit data showed mixed results. The number of employed remained unchanged month-over-month and increased less than 1 percent year-over-year. The available workforce increased less than 1 percent month-over-month and decreased less than a percent year-over-year.

In addition, North American vehicle production fell month-over-month by 3.9 percent, but registered a 6.4 percent gain on the year. The price of a crude oil per barrel increased 1.8 percent and 2.5 percent month-over-month and year-over-year, respectively.

In related news, the HBA announced its leadership team for 2023. The new Executive Committee includes:

  • President: Rino Soave, Infinity Homes & Co., Novi
  • First vice president: Jason Minock, Atwell, Southfield
  • Treasurer: Tim Capaldi, Capaldi Building, Birmingham
  • Secretary: David Steuer, Steuer & Associates, Farmington Hills
  • Immediate past president: Ben Templeton, Templeton Building, Birmingham
  • Vice presidents: Barbara Burnham, B.J. Burnham & Associates, Bloomfield Hills; Vito Castellana, V.I.P. Homes Inc., Shelby Township; Darian Neubecker, Robertson Homes, Bloomfield Hills; Brian Szliter, Arteva Homes Inc., Rochester Hills; Rino Soave, Infinity Homes & Co.
  • Associate vice president: H. William Freeman, Lumberg, Freeman, Gleeson, Hicks & Khalil, Bloomfield Hills
  • CEO: Forrest M. Wall, Home Builders Association of Southeastern Michigan

“We are fortunate to have Rino as HBA’s president for 2023,” says Wall. “He has served on HBA’s Board of Directors since 2009 and on our executive committee since 2015. His business experience and complete understanding of HBA’s operations will be a valuable asset to our organization moving forward.”

Soave launched his company, Infinity Homes & Co., in 2000 at the age of 19. Since its inception, Infinity has built more than 2,500 single and multifamily homes throughout southeastern Michigan.

The company also handles internal land development, land and real estate acquisitions, residential leasing of company owned apartment communities, commercial leasing of its company office buildings, and property management of company-owned properties.

The HBA’s Executive Committee is responsible for furthering the building industry’s relationship with municipal and county governments and providing representation in the state and national associations. Additionally, the Committee assists in overseeing HBA’s mission to provide education, information, programs, networking, political action, and all other activities that advance the building industry.