Building permits hit five-year high

Permit applications hit their fastest pace in nearly five years in October as the housing market recovery continues making inroads. 

Builders applied for construction permits at a seasonally adjusted annual rate of 1.034 million, 6.2 percent higher than September’s pace of 974,000 and the fastest since June 2008, the Commerce Department said Tuesday. 

The increase was led by construction plans for multifamily units — at their highest level in five years — while single-family permits came in just short of a five-year high. 

{mosads}”Permits are often a harbinger of future housing activity and the strong showing in the multi-family sector along with stable numbers on the single-family side bode well for a continuing, gradual upturn in housing over the coming months,” said Robert Denk, senior economist for the National Association of Home Builders (NAHB).

“But consumer and builder confidence could be seriously undermined unless policymakers make progress over looming budget, tax and economic policy issues in the weeks and months ahead.”

Multifamily permit issuance jumped 15.3 percent to 414,000 units in October, with the South leading the way. 

Single-family permits were 0.8 percent higher in October hitting a rate of 620,000 up from September’s 615,000. 

The three-month average for total building permits also reached a five-year high. 

Housing data over the past week has provided a mixed picture as to how the recovery of the sector is doing, but it is reflecting an improving market that is tallying steady gains. 

Data on housing starts for September and October was delayed by the 16-day government shutdown in October and will be released Dec. 18. 

“Despite the recent government shutdown, builders feel a housing recovery is still underway,” said Rick Judson, chairman of the NAHB and a homebuilder from Charlotte, N.C. 

“However, this fragile recovery still faces a number of challenges, including uncertainty in Washington, tight credit conditions for home buyers and limited availability of labor and lots.”

Mortgage rates have been on the rise in recent months, but new data Tuesday showed that the contract rate for previously owned homes fell to 4.32 percent from 4.36 in September. 

Freddie Mac pegs the rate on a 30-year, fixed mortgage at 4.22 percent, still nearly historic lows. 

Regionally, permits issuance in October held steady at 101,000 units in the Northeast and rose 15.4 percent in the West and 9.4 percent in the South. The Midwest posted a 9.6 percent decline.

Permits are now above local norms in Boston; New York; San Francisco; Austin, Texas; Houston; Oklahoma City; and San Jose, Calif.

However, permits are still way below local norms in Atlanta; Phoenix; Las Vegas; Sacramento, Calif.; Chicago; and Detroit, according to Trulia, which tracks housing market trends. 

The separate Case-Shiller report released on Tuesday for September showed the biggest month-over-month increase since April for the 20-metro-area index.