By Andrew J. Pisani
The numbers are in for housing construction permits for September, and the numbers look good. At 2,218 new units approved, we saw the highest monthly volume in all of 2016.
Sound good, right? Yes and no. Year over year, the numbers are actually down from 2015. On top of that, over half of the newly approved units fall under three major projects.
The drop off from 2015 makes sense – due largely to the expiration of the 421-a tax exemption. The anticipation of this deadline brought with it a crush of filings for new projects that are now in motion. After this rush, the pipeline of new work is still being refilled.
A look at the top-line numbers really shows this – in 2015 there were 42,140 units approved, while this year we are looking at 10,982. Dramatic difference to say the least. When you dig into the details you see the picture – in May and June of 2015 alone, permits for 29,000 housing units were issued.
Looking beyond the rush for permits, the work should level out. The general sentiment in the industry is that the permits represent only a single data point and the fact is that more projects are simply past the milestone of approval. And the good news here is that there’s more work happening right now, which will carry us through to the point where the pipeline of new work can be refilled.