New Construction Permits Rebound in March
Topics: Home Building, Research, Residential Real Estate
Markets: Birmingham Metro, Huntsville-Madison County, Statewide
While permits for new single family housing units declined 9 percent nationwide and 2.8 percent in the south region, they increased in Alabama during March. Single family permits in the state increased 20.4 percent year-over-year (y/y) from 995 in March 2018 to 1,198 in March 2019. The large gain in March helped erase February’s decline, and permits in Alabama are now up 6 percent year-to-date (YTD).
Permits in Alabama are now up on the year thanks, in part, to impressive growth in Huntsville’s new construction market. Permits issued in the metro area in March increased 45.8 percent y/y, bringing YTD growth to 39.9 percent y/y. The Huntsville metro area leads the state in total permits in 2019, with 835 through March, while the Birmingham-Hoover metro area is second with 680. This is even more impressive when one considers the population estimates for both areas: 455,500 in the Huntsville metro area and 1,130,000 in Birmingham-Hoover. Additionally, many economic development projects are underway in the Huntsville area, including the Toyota Mazda manufacturing facility. This will give added energy to an already strong new construction market as population and job growth continue to trend upwards in the area.
However, the boom in new construction activity in north Alabama is not limited to Huntsville. Permits for new construction in the Decatur area are up 67.7 percent YTD from 2018. With a strategic location along the Tennessee River, access to two Class I railroads (Norfolk Southern and CSX), and nearby I-65 it is no surprise that 12 Fortune 500 companies have invested in the Decatur area. Moving to the northwest corner of the state, Florence-Muscle Shoals has also experienced a rise in new construction activity as permits are up 4.4 percent YTD from 2018. As the region’s economy continues to grow and diversify, expect cities in the north Alabama region to continue to lead the state in permit growth rates.
Impressive growth in new construction permits was also seen in the Mobile area during the first quarter of 2019. Even though permits dropped 6.1 percent y/y in March, year-to-date permits are up 25.7 percent from 2018. One surprise out of the coastal region, however, was the decline in permits for new construction in the Daphne-Fairhope-Foley metro area. Permits in the area were decreased 8 percent in March and are down 11.1 percent year-to-date. But the region is coming off a record year in 2018 and the 458 permits issued YTD in 2019 rank third in the state. This volume of new construction activity is impressive for a metro area that has roughly 210,000 residents. Two other metro areas, Dothan (-25.4 percent) and Tuscaloosa (-16 percent), posted year-to-date permit declines in 2019. Stay tuned to see if these trends from the first quarter continue in 2019.