Permits to build new single-famly homes totaled 134 in July, dropping 27 percent from the 184 permits that were issued in June, the highest volume month so far this year.
Year-over year, activity dropped 18 percent from July 2015’s 158 permits issued in the metro area overall, which DataTraq defines as Albuquerque, Rio Rancho, Los Lunas and unincorporated Bernalillo County.
“Month-over-month is not as big an issue as many production builders will get all their permits bundled up at a single time,” which may account for a busier June, said John Garcia, executive vice president of the Home Builders of Central New Mexico. He said a single quarter is a better snapshot of how active the market is.
New residential construction midway through 2016 was up by 3.6 percent over last year.
Home construction is currently averaging 138 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.
Housing starts and closings, the actual buildings on the lots, are also showing better development this year than in 2015. With this increased activity, lot availability is down. “Under this scenario, there will be pressure on pricing as new lots will be replaced at full market value,” said Garcia.
“We should, however, be building at twice this rate with equilibrium pacing at closer to 2,000 permits mid-year. But due to slow job growth and other economic uncertainties, we just have not kept pace with other Western cities.”
In the Albuquerque metro area, developer Pulte Group was issued the most permits, receiving 33 in July. LGI Homes NM was a distant second, receiving 18 permits last month.
Fifty-four percent of the home permits issued were in the $150,000-$250,000 price range, according to DataTraq.
During the peak selling season, a shortage of existing homes for sale has helped up drive up prices in many areas and narrowed the number of days on the market, reports the Greater Albuquerque Association of Realtors.