Mortgage
rates
remain
relatively
high
and
existing-home
inventory
is
low
as
a
result.
That’s
providing
a
golden
opportunity
for

homebuilders.

The
National
Association
of
Home
Builders
(NAHB)
reported
Tuesday
that
its
Home
Building
Geography
Index
(HBGI)
showed
growth
in
the
number
of
building
permits
during
the
second
quarter
of
2024
in
every
region
of
the
country.

“Despite
the
elevated
interest
rate
environment,
single-family
construction
continues
to
move
along
at
a
better
pace
than
2023
and
has
been
led
by
a
rebound
in
construction
activity
in
high
density
areas,”
NAHB
Chairman
Carl
Harris
said
in
a
statement.

The
HBGI
uses
single-family
home
permit
data
to
gauge

construction
growth,
which
is
broken
into
seven
geographic
regions.

Single-family
permitting
increased
the
most
in
what
NAHB
calls
“large
metro
core
counties,”
where
the
four-quarter
moving
average
increased
by
17.6%
on
a
year-over-year
basis.
Suburban
counties
in
large
metros
saw
permits
increase
by
17%,
while
activity
in
core
counties
of
small
metros
increased
by
16.7%.
“Micro”
counties
posted
the
slowest
growth
at
3.4%.

The
growth
in
permitting
comes
even
as
for-sale
inventory
has
steadily
increased
for
builders,
but
that’s
by
design.
Builders
have
increasingly
shifted
toward
a
business
model
based
on
spec
building
—
that
is,
building
a
house
without
having
a
buyer
lined
up.

Analysts
say
that
builders
will
continue
to
hold
more
spec
inventory
than
they
used
to,
and
they
will
discount
it
aggressively
if
they
have
to
hold
it
longer
than
they
want.

The
data
from
NAHB
is
reinforced
by
a
strong
new-home
sales
report
from
the

U.S.
Census
Bureau.

In
July,
new-home
sales
jumped
10.6%
compared
to
June
and
were
up
5.6%
year
over
year.
The
numbers
were

a
pleasant
surprise
relative
to
expectations.

The
HBGI
grew
by
17.5%
in
areas
where
second
homes
are
prevalent
—
defined
as
a
county
in
which
at
least
10.3%
of
the
total
housing
stock
is
a
second
home.

While
single-family
construction
continues
to
boom,
multifamily
construction
is
slow.
Multifamily
permit
rates
dropped
in
all
seven
regions
in
the
second
quarter
due
to
limited
financing
options
and
high
levels
of
inventory,
among
other
factors,
according
to
NAHB.

“Multifamily
construction
continues
to
slow
as
builders
deal
with
higher
rates,
a
shortage
of
workers
and
supply
chain
concerns
for
some
building
materials,”
Harris
said.

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