Building Permits Surge In December; Signals A Strong Spring Housing Market

By
Mortgage and Lending with Dean Tucker Benchmark Mortgage - Prime Equity Group NMLS# 103829

Each month, in conjunction with the Department of Housing and Urban Development, the Census Bureau releases its New Residential Construction report. The report is comprised of several sections, one of which counts the number of homes that have "broken ground" in Idaho and nationwide.

They're called "Housing Starts" and, by most measures, they faded quickly as 2010 came to a close.

Housing Starts 2007 thru 2010According to the Census Bureau's report, Housing Starts of single-family homes fell to 417,000 units on a seasonally-adjusted, annual basis. The figure marks a 9 percent drop-off from November, and is the lowest reading since May 2009.

Not surprisingly, the press went bearish on housing post-release:

  • U.S. Home Building Stuck Near 50-Year Lows (AFP)
  • Housing Starts Slowed Sharply In December (New York Times)
  • Housing Starts Fall In December To One-Year Low (Bloomberg)

Despite being truthful, these headlines are somewhat misleading. They each ignore a key element of December's New Residential Construction report - Building Permits. Building Permits rose 6 percent to an 8-month high last month.

A building permit is a local-government certification that authorizes home construction. 

Permits are a precursor to Housing Starts with 82% of homes starting construction within 60 days of permit-issuance. More permits in December, therefore, should lead to more Housing Starts in January and February.

It's unclear whether permits were up because the economy was improving, or because builders raced to beat new building code for 2011. Regardless, expect additional "new home" supplies this spring which would ordinarily help home prices drop if not for the normal surge in spring buyers to gobble those new homes up.

Look for home prices to stay flat, but with rising mortgage rates contributing to higher costs of homeownership overall.

Posted by

Benchmark Mortgage Boise Idaho

 

 

 

 

Call us with any questions you have relating to residential mortgages (208) 287-1717, we are always very happy to help. We specialize in home loans for first time home buyers, move up buyers, second home purchases, and resort lending. The loan products available to my clients include FHA, IHFA, VA, Conforming Conventional, Jumbo and Super Jumbo Portfolio.

Our primary markets are Ada County (Boise, Eagle, Meridian, Kuna, Star), Canyon County (Nampa, Caldwell, Middleton), and Valley County (Cascade, Donnelly. Tamarack, McCall).

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Comments 2 New Comment

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Rainmaker
1,120,210
Li Read
Caring expertise...knowledge for you!
Sea to Sky Premier Properties (Salt Spring)

Definitely good news!    I think we bounced along the bottom between April and October, 2010, and this is an entirely different year.

January 20, 2011 01:51 PM
Rainer
166,580
Rose Mary Justice
Elite Realty Group
Elite Realty Group

Looking forward to a good year in 2011

January 20, 2011 01:56 PM
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Rainer
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Dean Tucker

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