In an otherwise outstanding year for Indianapolis-area homebuilders, December turned out to be a letdown.
Builders filed 381 single-family construction permits in the nine-county area in December, a 10 percent decline over the 421 permits they filed in December 2017, according to the Builders Association of Greater Indianapolis. It was the only month of 2018 in which permits declined on a year-over-year basis.
Despite the disappointing closing month, 2018 turned out to be the busiest year for builders in more than a decade.
Builders filed 7,072 permits over the full year, a 14 percent increase over the 6,198 permits that were filed in 2017. That’s the highest number of filings since 2007, when 7,326 permits were filed.
Filings slowed in the fourth quarter, falling 1 percent over the same period of 2017.
“The 2018 permit growth of 14 percent over 2017 shows us that there is strong demand for new housing,” said RLS Building Corp. owner Bob Sandberg, incoming BAGI board president, in written remarks.
“However, the yearlong decreasing permit trend clearly shows a weakening in the market at the higher price points (above $250k).”
Sandberg said wage growth is not keeping up with job growth, creating more demand for new housing at “workforce housing price points,” starting around $125,000.
“Due to material price increases, zoning restrictions and development regulations, [that] is the product most difficult for the industry to supply,” Sandberg said. “If those trends do not change to provide housing options to match the wages of the jobs created, the slowing of the market experienced in the last two quarters of 2018 may continue into 2019 and beyond.”
BAGI said the area permits filed in 2018 will result in an economic impact of $1.3 billion in local income, $288 million in local taxes and 21,442 jobs.
Hamilton County was once again the busiest local county for home building, with 36 percent of area filings taking place there in 2018.
Filings were down in Hamilton County by 23 percent in December compared with a year ago, to 121, but were up 15 percent for the entire year, to 2,577.
Marion County filings dropped 5 percent in December, to 76, but rose 23 percent for the year, to 1,357.
Hendricks County numbers were down 8 percent for the year, to 882. Johnson County filings rose 8 percent during the year, to 800.
Hancock County saw a annual rise in filings, to 592. Filings rose 9 percent in Boone County in 2018, to 448.
Year-end Morgan County numbers were up 38 percent, to 175. They rose 36 percent in Madison County, to 129, and were up 5 percent in Shelby County, to 112.