Recent housing market data reveals a notable slowdown in single-family building permits across the United States, signaling weakening demand despite the traditionally strong spring selling season. Goldman analysts, including Susan Maklari and her colleagues, have presented comprehensive heat maps showing declining builder activity amid high mortgage rates and ongoing economic uncertainty.
April marked a significant shift as single-family permits decreased 1% year-over-year on a trailing 12-month basis, contrasting with March’s 2% increase and last year’s 14% growth. This represents the first decline since January 2024, indicating builders’ cautious response to market conditions.
National home values, according to Zillow data, maintained a 2% year-over-year growth rate, matching the previous month’s performance. While five states recorded growth exceeding 5% (down from twelve in March), 38 states experienced modest gains between 0-5%, up from 34 in the previous period. Notable declines were observed in Florida and Arizona, both dropping 2%, with Texas, Georgia, and Colorado showing slight decreases. Conversely, Nevada and Virginia demonstrated resilience with 3-4% growth, while California and Utah each posted 2% increases.
The three-month permit data provides additional insight into recent market dynamics, showing a 5% year-over-year decline through April, deteriorating from March’s 4% decrease. This stands in sharp contrast to the 21% growth recorded a year ago, though still representing a 22% increase compared to pre-pandemic levels. Only five states maintained double-digit growth, down from six in March.
Metropolitan Statistical Area (MSA) data reveals particular weakness in the Southwest region. Among the top 50 MSAs, permits declined 6% year-over-year for the three months ending in April, compared to March’s 5% decrease. Orlando led positive performers with 23% growth, followed by Oklahoma City (14%) and Boise (12%). Florida markets showed significant weakness, with Jacksonville (-35%), Lakeland (-26%), and Port St. Lucie (-23%) experiencing the steepest declines.
Two-year stacked analysis highlights strong performance in select markets, with Stockton, California leading at 67% growth, followed by Cape Coral, Florida (66%), and San Diego, California (61%). The South and West regions dominated the top performers, accounting for seven of the top ten MSAs.
The current market environment is particularly challenging, with U.S. 30-year mortgage rates hovering around 7%. This has contributed to existing home sales reaching their lowest level since April 2009. Despite the increased housing supply, pricing pressures persist, with the median sales price reaching an April record of $414,000, representing a 1.8% year-over-year increase.
Builders are actively adjusting their strategies in response to these market conditions, moderating new construction starts across various price points. This calculated approach aims to balance inventory levels with current demand while protecting profit margins. The trend reflects broader market challenges, including persistent macroeconomic uncertainty and elevated interest rates, which continue to impact both builder confidence and consumer sentiment as the market enters the summer season.
The permitting data serves as a crucial forward-looking indicator, offering insights into future housing supply, builder sentiment, and anticipated market demand. The current trends suggest a market in transition, with regional variations highlighting the complex nature of the housing sector’s response to challenging economic conditions.