Local home building continues momentum

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DUPONT — The number of new homes permitted in a six-county region of northeast Indiana in the first three-quarters of the year continued to increase steadily, but this year’s growth was largely due to Allen County.

The number of new homes permitted in Allen, Adams, DeKalb, Huntington, Wells and Whitley counties rose from 1,159 in the first nine months of 2017 to 1,216 in the same period of this year, an increase of 5 percent. An increase of 75 permits in Allen and five permits in Whitley was balanced by small decreases in the other four counties, according to data analyzed by the Home Builders Association of Fort Wayne.

Within Allen County, Perry Township, on the northwest side, replaced Aboite as the busiest building market in Allen County, with 236 new home permits issued in the first nine months of the year. Aboite Township accounted for 158 new home permits, down from 189 a year ago.

The average value of a new home permitted was up in every county except Wells, which does not record all permit values. The Allen County average rose from $247,976 to $258,845, an increase of 4 percent. Allen County average permit values were the highest among the counties analyzed, besting Dekalb County by about $2,500.

Builder costs have been climbing much faster than home prices, however. The cost of lumber, driven up in part because of the trade dispute with Canada, has risen significantly, according to data in the HBA’s most recent newsletter. The cost of lumber for a basic ranch home on a slab was up $2,464, an increase of 11 percent, between September 2017 and September of this year. The cost of lumber for a custom, two-story home with walkout basement and screen porch rose $6,808 year-over-year in September, an increase of 10 percent.

Nationally, many analysts have expressed concerns about the strength of the housing market. U.S. housing starts fell 5.3 percent in September. That followed a downward revision in the August growth rate to 7.1 percent from an earlier estimate of 9.2 percent.

The 30-year mortgage rose above 5 percent in October for the first time since 2011, Bloomberg News also reported. Rising rates have left the housing market “at the end of its affordability rope and prone to further downside,” Deutsch Bank analyst Nishu Sood wrote in a note. This is the first time since World War II that high prices are halting housing momentum at what should be the middle of the cycle.

This story originally appeared in our sister publication, Greater Fort Wayne Business Weekly.