The most recent building permit data was one of the more bullish economic indicators that surfaced in Q1 2015, with the February data showing some decent growth from January and from Feb. 14. The U.S. Census Bureau said building permits in February were at a seasonally adjusted annual rate of 1,092,000, 3% above the revised January rate of 1,060,000 and 7.7% above the February 2014 estimate of 1,014,000. Single-family authorizations in February were at a rate of 620,000, 6.2% below the revised January figure of 661,000. Authorizations of units in buildings with five units or more were at a rate of 445,000 in February.
When you drill down into some of the local building permit data, you get a clearer picture of which regions of the country are getting off to the fastest start in 2015. Construction economists respect building permit data because it’s a pretty accurate reflection of where residential construction market is headed. Home builders don’t usually purchase a local building permit unless they are definitely planning on building, and they usually pull the permit fairly far in advance of construction, giving economists an early look at where homes will be built.
Single-family permits are always of particular interest because each single-family permit typically represents a home of much more value than a multi-family permit. With the cold weather that the Northeast and Midwest regions of the country had in 1Q 2015, it probably comes as no surprise that the five Metropolitan Statistical Areas (MSAs) with the most building permit activity for the first two months of 2015 are all cities in the Sunbelt — Houston (5,925 single-family permits year-to-date (YTD) through February); Dallas (4,325 permits YTD); Atlanta (2,787 permits YTD); Phoenix (2,046 permits YTD) and Austin (1,789 permits YTD). It’s also interesting to note that home builders in these three Texas metros have already pulled a combined total of 10,278 single-family building permits in January and February — a total that’s way more than many states see in an entire year.
