House-building permits in metro Milwaukee this year are running 17.6 percent below 2004’s pace, a possible sign that the long-predicted market slowdown has arrived.
Local communities issued 567 new-home permits through March 31, down from 688 in the first quarter of last year, MTD Marketing Services in Menasha reported. Average house price was $264,167, 2.8 percent above the $256,854 average in the first quarter of 2004.
March was the fourth straight month of year-over-year decline, according to MTD, which tracks one- and two-family homes in most of Waukesha, Washington and Ozaukee Counties, but only Greenfield, Oak Creek and Franklin in largely developed Milwaukee County. Permit volume started sliding last December, to about 15 percent below the year before, and continued shrinking this year. March was the worst month yet, dropping 21 percent to 216 permits from 272 a year earlier.
“It’s still early in the year — too early to say what’s going on. Our primary building months are just getting started — April through August is the meat of our season,” said Matt Moroney, executive director of Metropolitan Builders Association of Greater Milwaukee.
“A lot of this could be a hangover from the inactivity of last fall,” during national election season, when home shoppers typically are distracted by politics, Moroney said. “We do expect some slowdown this year, though nothing as dramatic as being shown by these stats.”
Housing economists predict that rising interest rates this year will cool the sizzling home-building market, on a four-year record-breaking roll. There’s nowhere to go from last year’s 1.95 million starts except down, they say. But the National Association of Home Builders believes this year won’t be down by much — slipping just slightly to 1.93 million housing starts before dropping more in 2006.
March home construction figures aren’t available until later this month. But permits are down in other Wisconsin markets tracked by MTD, said company partner Dominic Collar.
This was the slowest first quarter in five years for the Fox Valley and Green Bay areas, his figures show, while both the Racine-Kenosha area and Madison’s Dane County are running somewhat below last year’s pace.
“What we are seeing is a reduction in the smaller spec-home starts. Custom home starts are continuing at about the same pace as last year,” Collar said.
“By June 1, we’ll have a good sign of what kind of year this will be,” said Craig Rakowski, president of James Craig Builders Inc. in Wauwatosa.
