Following building permit trends is very important in understanding short-term dynamics in real estate markets. Decreasing building permits signal decreasing supply of new homes in the next 12 -24 months. If that coincides with increasing housing demand it may trigger or support price increases, depending on the supply-demand balance in the local market.
Areas with the largest decreases in building permits may be of special interest as they point to areas where supply may be relatively more limited in the short term. However, course such prospects need to be juxtaposed against expected demand levels for new single-family units in these areas.
State data provided by the US Bureau of the Census on single-family house building permits, as of August 2009, indicate that, year-to-date, they have posted significant declines in all states but one.
The three top states in terms of largest decreases in single-family building permits over the period January-August 2009 compared to the permits issued in the period January-August 2008, are in ranking order the District of Columbia, Georgia and Nevada, where permits posted annual declines of 52%, 50% and 48%, respectively. North Carolina and Colorado complete the list of five states with largest single-family building permit declines, as they posted annual decreases of 46% and 45%, respectively.
The only state that registered rising building permit trends was North Dakota where the January-August 2009 single-family building permits posted an annual increase of 3%.
The three top states in terms of smallest decreases in single-family building permits were Nebraska, Iowa and Louisiana, where year-to-date building permits as of August 2009 posted annual declines of 4%,9% and 13%, respectively.
The graph below portrays the 10 states with largest annual single-family housing building permit declines and the 10 states with the smallest declines.
Single-Family Building Permit Trends January-August 2009
Sources: US Census Bureau,www.Property-Investing.org
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