New housing permits in Metro Detroit plunge in May
Construction permits for single-family homes in Metro Detroit plunged 13 percent in May compared to the same period one year ago, dimming hopes this would be the best year in residential construction since the housing crash nine years ago.
Housing permits are a way to track construction of new homes. And the May numbers for Wayne, Oakland, Macomb and St. Clair counties show the market hit an unexpected wall, according to monthly data compiled by the Home Builders Association of Southeastern Michigan.
A total of 374 single-family and 70 multi-family permits were issued in the four counties in May. For single-family housing, that’s a 13 percent drop from May 2015 and a 7 percent drop from April of this year. The home builders association had forecast 500 permits for May, which is one of the prime months for activity.
The latest numbers puts Metro Detroit on pace to have 4,300 to 4,600 housing permits filed in 2016, said Michael Stoskopf, CEO for the home builders association.
“It’s not going to be a super year, but activity this year is still up 10 percent compared to last year,” Stoskopf said.
Prior to May, monthly activity from January to April had put the area on pace to have more than 5,000 permits filed in 2016, Stoskopf said.
That would have made 2016 the best year in new housing construction since the Great Recession, when the number of new housing permits in southeast Michigan averaged about 10,000 a year.
Stoskopf attributed the May slowdown to a shortage of subcontractors, which is delaying work, as well as a declining number of potential home buyers.
The lack of new housing is adding to higher prices for residential real estate. The median sales price of homes and condominiums in Metro Detroit hit an eight-year high of $165,000 in May, according to monthly data compiled by Farmington Hills-based Realcomp II Ltd.
At the bleakest point of the mortgage crisis — when foreclosures flooded the market with 39,500 properties for sale — Metro Detroit’s median price sank to $38,000 in March 2009, according to Realcomp.
For the past several years, scarce inventory has plagued the market. In May, there were 13,363 properties for sale — a 17.1 percent drop from May 2015. Sales were up last month to 4,925, compared with 4,561 in May 2015, an 8 percent improvement.