Building permits were issued for 118 detached, single-family homes during the month, a decline of 23 permits or 16 percent from August of 2012, according to a new housing market report released Friday by DataTraq.
“I am not overly surprised at this speed-bump on the road to recovery,” said Jim Folkman of the HBA, the homebuilders association in the metro. “We have believed from the outset that this turnaround was going to be neither quick nor always consistent, but it is a recovery nonetheless.”
All of the August year-over-year decline in permits can be accounted for in Rio Rancho, where the number dropped from 48 in 2012 to 24 this year. Folkman described the drop in Rio Rancho as something of a blip in permit issuance that’s hard to explain.
“I think over the next year we’ll see fewer and fewer of these temporary downturns,” he said.
Rising interest rates on 30-year fixed-rate mortgages could have been in factor in the August drop. The average monthly mortgage rate has been rising gradually since hitting bottom at 3.35 percent in November and December of 2012, according to Freddie Mac data.
The average rate last month was 4.46 percent, up from 4.37 percent in the preceding July and 3.6 percent in August 2012. The interest rate does not include average discount points, which have ranged from 0.6 to 0.8 over the past four years, Freddie Mac data shows.
After a relatively brisk start early this year, the permit pace has moderated in the metro.
Through the first eight months of this year, permits were issued for 1,102 new homes, a tepid 4 percent increase over 1,058 permits during the same period of 2012. Still, the 1,102 permits is the most issued during January-August since 1,166 were issued over the period in 2009, according to DataTraq.
Home construction is currently averaging 123 permits a month, DataTraq reports. For perspective, the metro averaged 734 permits a month in 2005, the record year for home construction locally, and 99 permits a month in 2011, the worst year for home construction since the early 1980s.
In the wake of the housing bubble and its collapse, some industry observers have said a healthy pace might be 290-375 permits a month.