Report: Metro Detroit Single-family Home Permits Rebound from End of 2021

Based on residential permit data compiled by the Home Builders Association of Southeastern Michigan (HBA) in Bingham Farms and reported in the HBA/Carter Lumber Southeastern Michigan Residential Building Activity Report, single-family home permits rebounded from the end of 2021, but remained down year-over-year.
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Single-family residential home permits have increased since the end of 2021, but are still down year-over-year. // Stock Photo
Single-family residential home permits have increased since the end of 2021, but are still down year-over-year. // Stock Photo

Based on residential permit data compiled by the Home Builders Association of Southeastern Michigan (HBA) in Bingham Farms and reported in the HBA/Carter Lumber Southeastern Michigan Residential Building Activity Report, single-family home permits rebounded from the end of 2021, but remained down year-over-year.

“We are pleased with the January totals,” says Michael Stoskopf, CEO of the HBA. “It seems that new home construction is ready to resume its steady pace even though the cold and snow are still with us.”

January’s total of 270 permits was 18 percent higher than December 2021’s revised total of 229, but 10 percent below the total for January 2021 of 300. As for multi-family permits, the 184 issued in January were down 8 percent from the revised total of 200 in December 2021. However, issued multi-family permits increased year-over-year by 3 percent, from 179.

“New home builders in southeastern Michigan are seeing increased traffic from potential buyers who want to lock in prices before the Fed begins raising interest rates. The first such increase is likely in March, which will then impact mortgage lending rates,” says Stoskopf.

“And while supply chain issues and resultant cost increases are still present, builders generally have a better handle on establishing prices and clearly communicating expectations to buyers, thus reducing some of the uncertainty in the buying process that defined much of 2021.”

Based on the econometrics used in HBA’s forecasting model, it is expected that permits should increase over the next four months. These metrics are largely showing positive indicators save for a couple of the factors measured.

The number of people employed showed zero change from December 2021 and a 5.3 percent gain from last January. The available workforce is slightly down year-over-year and slightly up month-over-month, indicating stagnation more so than losses or gains.

Another indicator, North American vehicle production, is up 5 percent month-over-month, yet down 9 percent year-over-year, potentially showing the start of a rebound from challenges caused by supply chain and workforce issues. The price of crude oil per barrel is showing short-term positivity too, dropping 10.3 percent month-over-month. Year-over-year, however, that price is still up 42.9 percent.

As for the average single-family home sale price and single-family permit values, it is nearly all positive. Year-over-year, the average home sale price was up 8.6 percent to $263,309 despite being down 3.4 percent month-over-month.

The average new single-family permit value was up in both categories, jumping 13.8 percent to $369,541 year-over-year and 15.8 percent month-over-month.

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