Single-family homebuilding soars in Utah
Across the state, 4,842 single-family building permits were issued in the first three months of 2006, a 9.8 percent increase from 4,409 permits in the first quarter of 2005, according to the University of Utah's Bureau of Economic and Business Research.
While single-family home permits continued to show no signs of slowing, permits in the first quarter for multifamily units hit 1,062, down 37.1 percent from 1,689 in last year's first quarter.
The decline in multifamily permits left overall residential permits — including single-family homes, apartments, condominiums, mobile homes and cabins — at 6,003 in this year's first quarter, a decrease of 3.2 percent from 6,203 permits in the first quarter of 2005.
James Wood, director of the U. bureau, attributed the 3.2 percent decline to fewer condominiums being built in Washington County.
"The important point is that single-family is up almost 10 percent," Wood said. "We're almost at 5,000 single-family units in the first quarter. It's crazy. All of the weakness is in multifamily."
Between 2000 and 2005, the 25- to 29-year-old group in Utah increased 38.3 percent, compared to a 2.5 percent increase nationally. Individuals in the 30- to 34-year-old group in Utah rose by 26.7 percent, compared to 3.4 percent nationally.
Despite the high number of permits issued, there is no serious talk of overbuilding or worries about unsold inventory, Wood said.
"Currently supply and demand appear in balance in most local housing markets," Wood said. "One possible exception is the St. George market, where investors and speculators have driven land and home prices up significantly in the past three years."
In St. George, land prices have tripled since 2001, and housing prices increased by more than 30 percent in 2005.
Kelly Matthews, executive vice president and economist at Wells Fargo, said nearly all economic indicators measuring the Wasatch Front are as "good or better than we thought it would be and better than it was last year."
"I had been saying that we would have a good year in '06 and certainly exceed '04, but I didn't think that we would exceed '05," Matthews said. "I thought mortgage rates would go up sooner, faster, further than they already have. It's an even bet now as to whether '06 will be better than '05."
The interest rate on a 30-year fixed-rate mortgage averaged 6.58 percent for the week ending April 27, up from 5.78 percent last year at this time, according to Freddie Mac's Primary Market Mortgage Survey. The 30-year fixed-rate mortgage has not been higher since the week ending June 20, 2002, when it averaged 6.63 percent.
"It appears that the strength of our economy is continuing to offset the impact of those rising mortgage rates," Matthews said. "Our residential real estate environment actually strengthened in the first quarter."
Nationally, sales of new single-family homes for the first quarter of 2006 were down 9.7 percent from the fourth quarter of 2005, and year-to-date sales were down 8.2 percent from the year before, according to the National Association of Home Builders.
E-mail: danderton@desnews.com
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