Maricopa & Pinal Counties See Surge in Building Permits Amid Market Shift

The housing market in Maricopa and Pinal counties is experiencing a notable surge in new construction activities, as evidenced by the substantial number of building permits issued for single-family homes. In May 2024 alone, authorities issued 2,740 permits, marking a 22% increase compared to the 2,246 permits recorded in May 2023. This upward trend underscores a growing interest in new home developments in these areas, reflecting a robust demand for newly constructed residences.

This increase in building permits has significantly impacted the cumulative figures for the year. By the end of May 2024, a total of 13,689 building permits had been issued in the first five months of the year. Although this figure does not surpass the peak construction years from 1998 to 2008, it represents the third-highest total since 2007 and shows a striking 56% increase from the previous year. Such statistics illustrate a rejuvenation in the housing construction market, positioning 2024 as a year of strong recovery and growth.

However, the surge in new constructions brings challenges for those selling existing, or re-sale, homes, particularly in areas with high levels of new construction like Buckeye, Maricopa, and Queen Creek. These areas are experiencing increased competition in the housing market, affecting the seller's leverage. The Construction Market Index (CMI) in these regions remains below 80, indicating a buyer's market influenced by a strong preference for new homes over re-sale properties, a trend that has been consistent in recent years.

Conversely, central locations such as Chandler, Tempe, Phoenix, and Glendale face a different scenario. The scarcity of vacant land in these areas limits new construction, thereby restraining the supply of new homes. This constraint helps maintain a seller's market, as reflected in the CMIs, which are currently above 120. Sellers in these areas continue to benefit from favorable market conditions, contrasting sharply with the challenges faced in regions with abundant new construction.

Even though permits are up, new construction is still a 6-18 month process so any new inventory from permit pulls is a LAGGING indicator for new inventory. Where we are with rates when that time comes will play a huge part if this supply helps at all or just ends up throwing more gas on the fire. 
 

Have a great week everyone!