Building Permit Momentum Slows Across the U.S.

Building Permit
Home under construction | Image by Trong Nguyen/Shutterstock

Single-family and multifamily developments across the U.S. are losing steam as more and more homebuilders pull back on the number of applications submitted for new construction projects.

Economic uncertainty in 2023 has spurred a broad slowdown in residential and multifamily construction permits across the U.S., despite Texas and DFW ranking No. 1 the year prior, according to a new Point2 report using historical data from the U.S. Census Bureau and Bureau of Labor Statistics.

“The current housing market is a mixed bag,” a Point2 analyst said in the report. “Trapped in the financial rollercoaster that is gripping the nation, both homeowners and potential homebuyers are experiencing decision paralysis.”

“With the barrage of news about skyrocketing and plunging home prices, inflation, rising and falling mortgage rates, buyer’s markets and seller’s markets, and the most recent banking debacle, it’s becoming increasingly difficult to see the facts and make any decision whatsoever about buying and selling,” the report suggests.

In 2022, Texas, Florida, and California issued the most construction permits, accounting for over one-third of all U.S. permits last year. Texas issued 263,529 residential permits, followed by Florida with 212,206, and California with 118,090.

Dallas, Houston, and New York achieved the highest permit approvals at the metro level in 2022, outpacing all 384 metros included in the analysis. DFW ranked No. 1 with 77,281 construction permits, which breaks down to 43,409 single-family and 32,650 multifamily permits issued in 2022.

The other 1,222 construction permits were for duplexes, quadplexes, and other two- to four-unit structures, according to the analysis. For comparison, the Houston metro ranked No. 2 with 75,786 combined construction permits, followed by New York at No. 3 with 58,991 residential and multifamily permits.

Despite the robust permitting numbers for Texas in 2022, momentum has recently begun to slow across the DFW Metroplex, with construction permits and housing starts falling sharply during the first three months of 2023, the report shows.

A breakdown of DFW suburbs shows that residential permits are currently down 58% in Anna, 42% in Frisco, 30% in McKinney, 26% in Prosper, and 10% in Denton.

In general, new home construction in DFW reportedly fell 39% in the first quarter of 2023 compared to the same time last year, according to Dallas-based market research firm Residential Strategies Inc. In total, homebuilders built 9,691 homes in the first three months of 2023 compared to 16,014 in the first three months of 2022, Dallas Business Journal reports.

While the number of new home starts declined over the past 12 months, Ted Wilson, principal with Residential Strategies, suggests that a recent boost in speculative inventory is leading to a growth in sales and traffic.

“Many relocation buyers that came to DFW over the past two-three years were initially thwarted in their efforts to purchase a house, and instead rented,” said Wilson, according to DBJ reporting.

“These households are now coming off the sidelines and taking advantage of the discounts and mortgage rate buy-downs that are being offered,” he said. “The typical homebuyer is now making peace with this era of higher mortgage rates and is moving ahead with their purchase decision.”

Although the report highlights DFW as a national leader in 2022, Dallas proper and its designated building permit department – Development Services Department (DSD) — encountered various challenges that prevented the city from attaining more robust permitting metrics.

Many of these challenges have been covered previously by The Dallas Express. Still, the main problems that impacted DSD last year were:

Long turnaround times.

A shortage of trained staff.

A fragmented review process that requires multiple departments within Development Services to approve a permit application before it is finally issued to the customer.

While some progress has been made in addressing these permitting problems, DSD still has a lot of work ahead of it if the department hopes to reverse the slowing momentum.

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1 Comment

  1. ThisGuyisTom

    This is a fantastic ***** 5 STAR report by The Dallas Express.
    I hope this gets bookmarked for future reference.



  1. Permit Activity Plummets – Round Up DFW - […] down 58% in Anna, 42% in Frisco, 30% in McKinney, 26% in Prosper, and 10% in Denton, as previously…

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