Single-family building permits rise to a 12-year high
If you’ve been following what’s happening in the current housing market, you’ve probably seen how the lack of newly constructed homes has caused a shortage of housing inventory available to buyers. Another reason is that the inventory of existing homes for sale has been shrinking. The national inventory of homes for sale at the end of December was 1.4 million, down 15% from November and a drop of 8.5% from a year earlier, according to the National Association of Realtors.
Bill McBride of Calculated Risk further noted,
“Inventory always decreases sharply in December as people take their homes off the market for the holidays. However, based on the data I’ve collected, this was the lowest level for inventory in at least three decades (the previous low was 1.43 million in December 1993).”
There is some good news on the horizon.
The number of building permits issued for single-family homes is the best indicator of how many newly built homes will begin to come to market over the next few months. According to the latest (January 2020) U.S. Census Bureau and U.S. Department of Housing & Urban Development Residential Construction Report, the number of building permits increased nationally 9.2% increase from December 2019 and 18% higher than January 2019. In the Northeast, the % increase in building permits is even higher at close to 36% to last year.
New inventory means more options. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), explained how this is good news for the housing market – especially for those looking to buy:
“Mortgage rates near record lows and a strong jobs market can’t help buyers find a property if there aren’t enough homes to go around. More construction will mean more housing inventory for consumers in the later months of this year…Spring months could still be quite tough for buyers since it takes time to convert housing starts into actual housing completions. As trade-up buyers move into these newly completed homes in the near future, their existing homes will be released onto the market.”