Residential Real Estate and Homebuilders and Home Sales and Economic Recovery and Economy and Housing Starts and Regional News and Real Estate & Retail

New-home construction off to mild start

February 23, 2012

Just like the winter, new-home construction got off to a mild start this year.

Building permits filed in the nine-county metropolitan area totaled 194 in January, a 2-percent dip from the same time last year. To put the number in perspective, 288 permits were filed in January 2010.

Even so, industry leaders are cautiously optimistic that new-home construction will continue to improve throughout the year.

Steve Lains, CEO of the Builders Association of Greater Indianapolis, said building-permit filings typically lag new-home sales, which seem to be on the rebound.

“What I’ve heard in the marketplace is that sales are high,” he said. “Traffic is better than it has been in past Januarys, and you’re probably going to see permit numbers improve in the next month or two.”

Recent sales figures for existing homes seem to show that the housing market indeed is improving.

Home-sale agreements in the nine-county region rose 13.4 percent in January compared with the same month a year earlier. And actual sales of existing homes shot up 28 percent in the area last month from the previous January, according to the Metropolitan Indianapolis Board of Realtors.

Reasons cited for the rosier results include lower unemployment, increased consumer confidence and historically low mortgage rates. To what extent high gas prices will factor into economic conditions remains to be seen.

This year could mark a turning point for the home-building industry. New-home construction in the area slid in 2011, marking six straight year-over-year declines in residential building activity. Further, the number of homes built in the metro area last year was the smallest since the residential market began slumping six years ago.

“We’re all cautiously optimistic,” Lains said. "We haven’t seen enough of a long-term trend, but in the third to fourth quarter I started feeling and hearing [positive] things on a regular basis. I’m really hearing it consistently now.”

Last month, Hamilton County registered 76 building permits, the most of the nine metro-area counties. But that still paled in comparison to the 90 filed in January 2010.

In Marion County, builders filed just 25 permits in January, a 17-percent decline from the same time last year.

Boone County was the only other county besides Hamilton to outperform Marion in terms of building permits filings. Boone County logged 27 last month, a 50-percent increase from the previous January.
 

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