Editor's Note: The original story that ran in the June 13 issue of The Daily News contained inaccurate building permit data. The story has been corrected and appears below. The Daily News regrets the error.
Building activity was up only slightly in May compared to the same month last year, but builders aren’t concerned. They attribute the slow growth to a soggy spring.
(Daily News File/Lance Murphey)
Building permits increased only 5 percent in May compared to the same month last year, a tepid improvement that builders attributed to a soggy spring and diminishing supply of lots.
Shelby County homebuilders filed 105 permits in May averaging 3,091 square feet and $251,288, according to the latest data from real estate information company Chandler Reports, www.chandlerreports.com.
The 100 permits filed in May 2012 averaged 3,190 square feet and $238,756.
“I wouldn’t make too much of it,” Keith Grant of Grant & Co. said of the minor uptick. “I think the market is still strong right now.”
Grant said the heavy amount of rain that has lashed Shelby County could have something to do with the stagnation in permit activity, along with fewer prime lots.
“It can be indications of the weather,” he said. “It could be a lack of favorable lots in Shelby County.”
Don Glays, executive director of the Memphis Area Home Builders Association, said a lack of affordable, quality lots is becoming a concern for builders. Glays said builders scooped up cheap lots from bank sales following the building bust and those lots are now running out.
“There is a sense of urgency in our builder members because they’re having difficulty finding reasonably priced, good-quality, high-value lots,” Glays said.
Going forward, Glays said builders could see input costs rise by as much as 20 percent.
“That really sets up a roadblock to affordability,” he said.
Collierville’s 38017 ZIP code saw the highest number of permits pulled with 20, averaging 3,265 square feet and $297,184. Arlington’s 38002 ZIP code saw 19 permits averaging 3,692 square feet and $240,920 and Westwood’s 38109 ZIP code saw 13 permits pulled, averaging 1,393 square feet.
The average permit value for May was $251,288, up from $238,756 over the same period last year.
Regency Homes had the highest number of permits with 28, averaging 2,911 square feet and $219,309. Karen Garner of Magnolia Homes had 12 permits averaging 3,981 square feet and $346,498 and DeVere Construction had 12 permits, averaging 1,398 square feet.
Shelby County homebuilders did see a dip in sales last month. Builders sold 53 new homes in May, down from 63 in May 2012. The average sales price in May was $233,405, down from $244,579 in May 2012.
“There’s nothing that shows the market is slowing,” said Grant.
Chandler Reports is a division of The Daily News Publishing Co. Inc.