Texas, Florida lead single-family permit growth
Single-family permits have grown nearly 27% in Colorado this year.
For the first 7 months of 2018, the total number of single-family permits issued year-to-date nationwide reached 521,438, the National Association of Home Builders (NAHB) reports.
On a year-over-year basis, this is a 7.0% increase over the July 2017 level of 487,495. The preliminary results from the New Residential Construction Survey from the U.S. Department of Commerce, show that year-to-date single-family permits over the first seven months of 2018 are at 522,200, a 7.5% jump from 485,900 for the same period in 2017.
Single-family permits in the South and West have grown 14.3% and 15.2% in the past 12 months. But have fallen 1.6% in the Northeast during that span, and have been static in the Midwest.
From July 2017 to July 2018, a total of 34 states had single-family permit growth while 16 states and Washington, D.C. saw a decline. The highest rate registered in Colorado with a 27.6% growth rate. In contrast, Washington, D.C. saw nearly a 70% drop.
Texas leads all states with 76,144 permits issued year-to-date in July 2018 with Florida second at 56,939, the NAHB said.
The 10 states issuing the highest number of single-family permits combined accounted for 60.6% of the single-family permits issued.
Year-to-date, ending in July 2018, the total number of multifamily permits issued nationwide reached 263,897. This is 6.7% ahead of its level over the first seven months of 2017, 247,391. The preliminary results from the New Residential Construction Survey show an increase of 5.5% in multifamily permits over the first 7 months of 2018 – a total of 265,400 compared to 251,500 for same period in 2017.
Between July 2017 YTD and July 2018 YTD, 32 states recorded growth while 18 states and the District of Columbia recorded a decline in multifamily permits, according to the NAHB. Rhode Island leads the way with a growth rate of 468%, from 25 to 142, while Mississippi had the largest decline of 76.2% from 917 to 218.
Mortgage rates on the rise
Mortgage rates have seen their largest year-over-year increase since 2014.
U.S. mortgage rates have climbed to their highest level in the past 6 weeks, according to Freddie Mac and the National Association of Realtors.
Mortgage rates are 0.82% higher than a year ago, marking the largest year-over-year increase since May 2014.
Despite higher rates, Freddie Mac says buyer demand will not be deterred.
“This spectacular stretch of solid job gains and low unemployment should help keep home buyer interest elevated,” said Sam Khater, chief economist for Freddie Mac. “However, mortgage rates will likely also move up, as the Federal Reserve considers short-term rate hikes this month and at future meetings.”
For the week ending Sept. 13, Freddie Mac reported a 30-year fixed-rate mortgage averaged about 4.6%, up from the prior week’s average of 4.54%. During the same period a year ago, 30-year rates averaged about 3.78%.
In the meantime, 15-year fixed-rate mortgages are averaged 4.06%, rising from 3.99% average for the week ending Sept. 7. A year ago, 15-year rates averaged 3.08%. In the case of 5-year hybrid adjustable-rate mortgages (ARMs), the average of 3.93% is unchanged from two weeks ago. But ARMs averaged about 3.13% for the same period last year.
U.S. should see solid housing growth
Population and household growth expected to fuel housing growth through 2022.
According to “Housing: United States,” a new report by Freedonia Focus Reports, U.S. housing starts are forecast to see annual growth of 2.4% through 2022.
Freedonia – a Cleveland, Ohio-based research firm – says builders will benefit from rising levels of employment and strengthening consumer finances. Population growth and household creation will also support gains.
But despite robust annual growth projected for housing starts, and a strong U.S. economy, total 2022 activity is only expected to reach 2007 levels.
The vitality of the housing market in the years leading up to 2007 was boosted by unsustainable factors – including easy access to credit – that are unlikely to reoccur in the forecast period.
Single-unit conventional housing starts are projected to remain the largest segment, Freedonia said.
Rising household formation will continue to support new residential construction. However, the average size of new single-unit conventional homes is expected to decline to 2022, reversing the gains of the 2007-2017 decade.