The Valley’s housing market has seen a sudden jump in buyer demand this year, a trend that’s now having a positive ripple effect on home building.
New single-family home permits issued throughout Maricopa and Pinal counties in May — almost 1,600 — rose 44 percent year over year, according to the monthly housing report released this week by Arizona State University’s W.P. Carey School of Business.
The health of the new home market is commonly measured by the number of permits issued, rather than home prices, which reflect the market several months prior when buyer and builder entered the contract.
Michael Orr, ASU’s housing expert and author of the monthly reports, said the permit increase shows that builders are feeling far more optimistic than they were last year, when many potential buyers were looking but few were actually pulling the trigger.
“Demand, which had been subdued for about a year and a half, started to come back and builders started to see that it wasn’t just more traffic, it’s more people actually getting out pens and signing contracts,” Orr said. “The builders said, ‘OK, we need to start building more because if this carries on, then we’re going to run very low.’”
But the new home market is still far from what it used to be, despite the recent boost in permits.
ASU data shows annual permits ranged from about 30,000 to almost 56,000 between 1996 and 2004. Since 2008, however, annual figures haven’t climbed above 13,000.
Orr said permits could top 15,000 by year-end, but it’s too hard to say how long before the new home market gets back to historical norms.
