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DALTX Real Estate > Home Building > Report: Single-Family Building Permits Fell Sharply in 2022 While Multifamily Surged
Home Building

Report: Single-Family Building Permits Fell Sharply in 2022 While Multifamily Surged

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Interest rate increases are affecting a lot more than just a home buyer’s ability to close on a single-family home. Skyrocketing costs for labor and materials, combined with fast-rising interest rates, are keeping buyers from building their dream homes, too. According to new nationwide numbers from the National Association of Home Builders, single-family permits were down 10. 5 percent year-over-year for November 2022.

“At 3 percent interest rates, a family could afford a $500,000 home. At 7 percent, their buying power only opens the door to a $362,000 one,” said Phil Crone, Dallas Builders Association executive officer. “On top of that, 90 percent of current homeowners have a mortgage interest rate of under 5 percent so this really is an unfortunate situation of haves and have-nots.”

However, that doesn’t mean that North Texas has stalled when it comes to single-family residential construction. According to NAHB’s Eye on Housing report, the top two metropolitan statistical areas when it comes to the volume of single-family permits issued are Houston-The Woodlands-Sugar Land and Dallas-Fort Worth-Arlington. For the 12-month period ending in November of 2022, the greater Houston MSA pulled 45,584 permits to the Dallas-Fort Worth area’s 41,275.

“We have geography and demographics on our side here in D-FW,” Crone said. “More than 400,000 jobs are expected here in the next five years. Homes are where the jobs sleep at night, which is why housing will still be in demand. You also have the largest cohort of the Millennial population coming into prime home-buying years. Only 40 percent of those aged 27-35 are listed as ‘head of household.’ In other words, the market is normalizing after two years of COVID-induced absurdity, but the Fed’s monetary policies are closing the door on millions of families who still aspire to be homeowners.”

Single-Family Permits vs. Multifamily Permits

However, another sector of the housing market is pulling permits like crazy.

While single-family residential building permits have declined, NAHB statistics show that multifamily permits are creeping skyward.

While single-family permits declined in all four regions during the 12-month period ending in Nov. 2022, multifamily permits posted increased in all but one region — the Northeast (-1.4 percent). The total number of multifamily permits issued nationwide reached 624,128. This is 14.8 percent ahead of the November 2021 level of 543,508. Permits were 25.2 percent higher in the South, 18 percent higher in the Midwest, and 5.6 percent higher in the West.

That’s no surprise to growing urban areas such as Dallas-Fort Worth, as many communities have seen multifamily developments grow exponentially while rents trend upward as well. That’s true for Dallas apartments and rentals as well as suburbs such as Frisco, Plano, and Richardson, which have posted some of the highest average rent prices in the region.

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TAGGED:Dallas Builders AssociationHome buildingPhil Cronesingle-family housing
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