The new home construction industry is posting some of its biggest numbers in money spent and permits issued in years, according to a new report issued by the Construction Industry Research Board (CIRB).
Construction permits for single-family homes for the year through August 2004 were valued at $1.86 billion, approximately $260 million more than the $1.59 billion posted at the same point last year.
Meanwhile, the attached housing market posted $617 million for the year-to-date through August 2004.
Russ Valone, president and CEO for MarketPointe Realty Advisors, said that the market strength can be attributed to "the same old story" of low interest rates and high resale values on homes.
"As long as rates stay down and the resale market continues to realize appreciation and as long they can move equity from an older home to a new home," Valone said.
CIRB also measures the strength of the home construction industry by tallying the value of building permits, the last step before building starts.
The construction market for new condominiums outperformed the new single-family detached home construction in August for the first time since April 2003, according to the report.
In August, 826 permits were pulled for the construction of condominiums in San Diego County, valued at about $97.8 million in construction costs.
The strength in the attached market can be explained by the glut being built downtown and the absence of new condominium stock for nearly 10 years, said Paul Tryon, CEO of the San Diego Building Industry Association.
"The opportunity is available that wasn't there before," he said. "Particularly downtown (San Diego), it's 30 percent of the new market."
One of the major steps forward that Tryon said allowed for the construction of the high-rise attached residential units was the rise of Wrap insurance policies.
The new single-family home construction market to date is on track to record the highest number of permits pulled since 2001.
Through August 2004, permits pulled for new home construction reached 7,048, moving well ahead of the former high water mark, the 6,707 through August in 2001.
The strong month brings the total units built so far this year to 12,090, creeping up behind the 12,292 total units built at this point last year.
Tryon said he expects the strong market housing to continue, in part, because of the continued strength of the employment sector.
California's unemployment rate remained unchanged at 5.9 percent while San Diego County's unemployment also remained stable at 3.8 percent last month, according to an October report issued by the California Economic Development Department.
While the permitting process is the beginning of the housing pipeline, the other end has been doing equally as well.
Earlier this week, the Commerce department reported that the sales of new homes nationally rose unexpectedly to the third highest level on record. On the other hand, prices posted the biggest monthly decline in 23 years.
Nationally, new-home sales increased in every region except the West.
In San Diego, local builders characterized the previously escalating sales pace as normalizing the past three months.
In July, August and September, "we saw a bit of a slowdown," said Mick Pattinson, president of Barratt American. But he was unconcerned, noting the usual slowdown for the season, plus the preoccupation with upcoming elections.
Staff writer Laura Mallgren contributed to this report.