Housing Permits Up In Only Three Metro Areas Of The Nation’s Top 50 Markets, 47 Report Declines In Building Permits For First Quarter

Only three major metropolitan areas - Los Angeles, Grand Rapids, Mich., and Sarasota, Fla. - managed to boost the number of single-family building permits during the January-March quarter.

The National Association of Home Builders said a study of building permits issued in the nation’s top 50 markets showed how extensive the housing slump was, compared with the same quarter of 1994.

Association President Jim Irvine, a Portland builder, attributed the widespread declines in 47 of those markets to peaking mortgage rates and an economy that began to turn sluggish.

“The drop in permits in the first quarter is consistent with a general slowing of the housing market and the national economy,” he said.

Permits fell from an annual rate of 1.42 million in December to 1.24 million in March, the lowest since 1.17 million in July 1993. But the rate since then has begun to turn up. Permits totaled nearly an annual rate of 1.25 million in May.

The economy itself grew just 2.7 percent at an annual rate during the first quarter, little more than half the 5.1 percent rate in the final three months of 1994 and the slowest pace in 18 months.

According to surveys by the Federal Home Loan Mortgage Corp., 30-year, fixed rate mortgages averaged 8.79 percent from January through March. They had fallen to 7.41 percent by last week, the lowest in nearly 1 years.

Despite slower housing markets, he does not foresee “any dramatic downturns.”

The home builders have revised their initial forecast for single-family housing starts downward to 1.02 million this year from an earlier estimate of nearly 1.1 million. Single-family starts totaled nearly 1.20 million in 1994.

In the first quarter, the Los Angeles area posted a 14 percent increase in permits to 1,085 compared to a year earlier. There were gains of 7.7 percent in Grand Rapids, to 1,026, and 1.0 percent in Sarasota, to 893.

But Irvine warned against interpreting the growth in the Los Angeles area as a widespread turnaround in California. He noted that other major markets in the state experienced significant declines.

“The California housing market is still struggling,” he said, suggesting that housing starts there may fall below 100,000 in 1995 for the fifth consecutive year. They averaged 230,000 a year during much of the 1970s and 1980s.