As housing demand continues to be supported by relatively low-interest rates, a continued consumer focus on the importance of housing, and solid demand in lower-density markets like suburbs and exurbs. Housing affordability headwinds will increase in 2021 however, due to price growth connected to more expensive building materials and mortgage rates trending higher. Indeed, mortgage rates are up more than 30 basis points over the last five weeks per Freddie Mac estimates.

 

Builder confidence in the market for newly-built single-family homes fell by two points in March, down to a reading of 82 in the latest NAHB/Wells Fargo Housing Market Index. The NAHB attributes this drop in sentiment to the meteoric rise in lumber prices, as well as ongoing material shortages and a 30-basis point rise in interest rates. In the Midwest, which includes the Dayton region, three-month moving average HMI fell one point to 80.

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In February 2021, Dayton region builders pulled 215 permits for single-family homes, which represents the sixth month out of the previous seven months (6/7) where permit data outpaced MoM data - February SF gains represent a 5.4% increase YoY from February 2020 and a 4.4% gain from the start of the year.

 

Single-family permit data continues to be an accelerant as low inventory and historically low-interest rates provide the backdrop for favorable headwinds for new construction. The 401 single-family permits through February 2021 represent the largest permit growth since 2006 and outpaces 2020 data by 17.6%.

 

Combining single-family, apartment, and condo units, a total of 409 residential new building permits were issued for February 2021, up 14.6% from 357 permits issued in February 2020. 

 

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HBA of Dayton regional permit data compiled by NPGDataQuest@outlook.com.