Homebuilders facing busy season

March 21st, 2016

News Coverage:

March 19, 2016

Homebuilders facing busy season

New-home permits triple compared with last February

Rosa Salter Rodriguez | The Journal Gazette

Fort Wayne-area homebuilders are set for a busy construction season this year, if numbers of new residential building permits are any indication.

Permits issued last month more than tripled compared with February 2015, according to figures released this week by the Home Builders Association of Fort Wayne. Meanwhile, year-to-date permits nearly doubled.

The numbers continued sizable year-to-date monthly increases in November and December 2015. Permits taken out at that time of year typically are for projects starting in the following year’s construction season.

Jamie Lancia, vice president of Lancia Homes in Fort Wayne, said mild winter weather had more buyers looking at building a home earlier than usual. In addition, a lack of existing homes for sale is spurring new-home construction.

“What’s going on in the real estate market is we’re not seeing a really good selection of existing (homes) on the market,” Lancia said. “A lot of our buyers are coming over and building new homes because of low inventory for existing homes.”

Indeed, statistics compiled by Upstar, the Fort Wayne-based Upstate Indiana Association of Realtors, show the number of homes on the market has been shrinking monthly for more than a year. 

Inventory shrank an average of 26.5 percent per month from the previous year’s figures between March 2015 and February 2016. Inventory went down nearly 30 percent last month compared with February 2015.

At present, there’s just a 2.6-months’ supply of homes on the market, further deepening a long-running seller’s market, one in which potential buyers outnumber sellers. A balanced market, which starts at about a 5-months’ supply, has not been seen since the summer of 2014.

Continuing low interest rates also are contributing to the surge, according to David Crowe, chief economist for the National Association of Home Builders.

NAHB statistics show that nationally, single-family home production rose in February to 822,000 units, up 7.2 percent from last year and the highest level since November 2007, just before the start of the housing slump.

“As the U.S. economy firms and mortgage interest rates remain low, we should see further growth in housing production moving forward,” Crowe said.

Locally, rates for a 30-year mortgage have ranged around 4 percent, Lancia said. Upticks in rates have been predicted for later this year, but the Federal Reserve voted this week not to raise its benchmark rate.

The Fed also pulled back from a December prediction that the rate would rise by a percentage point this year, saying any increase would be half that.

Buyers, however, are paying more for new homes. The average price so far this year is $248,597, compared to $225,341 last year, according to the local home builders.

That’s about a 12 percent increase. The number does not include the prices of lots.

The increase in home prices has also upped the total value of new home construction permits so far this year. That figure, $29.1 million, is nearly double last year’s $15.3 million.

Altogether, the number of new home permits issued in 2016 is 117, with February’s tally at 76 and January’s at 41. The comparable numbers for 2015 were 68 permits, with 24 in February and 44 in January.