Historical permit data reveals depth of inventory crunch

Dive Brief:

In an analysis of peak building permits by county from 2000, 2005 and 2015, the National Association of Home Builders found that 2015 had the smallest number of counties, 12%, experiencing max permit levels. Washington, DC, and North Dakota had the largest share of permits that year, HousingWire reported.
In contrast, 2005, at the height of the housing boom, had 60% of counties at their peak, with the highest shares in Arizona, Florida, Hawaii and Maine. In 2000, 28% of counties were at their highest, led by Michigan, Colorado and Indiana.
Comparing permits versus need, San Francisco had a 669-home cushion in 2015, with 2,996 housing units needed and 3,665 permitted. Dallas had a bigger buffer, with 15,558 units needed and 21,698 permits issued. In sharp contrast, Broward County, FL, needed 13,963 new units to meet demand, but just 5,452 were authorized. In Orange County, CA, 14,356 units were needed while 10,771 permits were issued.

Dive Insight:

While the housing industry is returning to normal activity based on many economic indicators, NAHB estimates put single-family permits at just 53% of typical levels.

Relief may be coming, albeit slowly: Building permit authorizations fell 2.5% from March to April but remain 5.7% above year-ago figures. From January to April of this year, permit authorizations were more than 10% ahead of where they were a year earlier.

Tight inventory continues to be a challenge impacting multiple demographics, though the situation is improving. Nationwide, there was less than a four-month supply of existing homes from December 2016 to February 2017. The latest figures show existing-home for-sale inventory at 4.2 months in April, up from 3.8 months in March, and new-home inventory at 5.7 months in April, up from 4.9 months in March.

The shortage is also hindering move-up buyers, who are nervous to sell out of concern they won’t be able to find another home they can afford in time, Two-thirds of real estate agents surveyed by Redfin in March reported that low inventory is sellers’ chief challenge today.