Residential construction in central Indiana continues to slump as interest rates rise – Indianapolis Business Journal

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Local architectural rules for building new homes and impact fees are two areas the task force is likely to consider. Builders say these factors often add thousands of dollars to construction costs. (IBJ Photo/Eric Learned)

Homebuilding activity in central Indiana continued to slow last month as interest rates rose, according to the Builders Association of Greater Indianapolis.

Builders in the Indianapolis nine-county area filed just 457 single-family building permits in October, down 46% from 845 in the same month of 2021.

Permit applications have declined year-over-year in the past 10 months and in 13 of the past 15 months. But October’s year-over-year decline was by far the largest of any month this year.

Builders filed 7,250 permits in the first 10 months of 2022, down 18% from the same period a year ago.

Rising mortgage rates, supply chain issues, rising costs and limited stock availability are hampering the market, industry experts say.

For the week ended Nov. 17, 2022, the interest rate for a 30-year fixed rate mortgage was 6.61%, according to Freddie Mac. For the week ended November 18, 2021, the interest rate for a 30-year fixed rate mortgage was 3.1%.

Steve Lains, CEO of BAGI, called the slowdown “neither surprising nor disheartening”.

“Mortgage rates have been exceptionally low in recent years, so a return to rates of 6 or 7% has caused a slowdown, or rather a return to normal, in the market,” Lains said in a press release.

The organization was anticipating a drop in sales in its State of the Industry Letter in August. According to the letter, builders are poised to see construction home sales slow by 25% through 2023.

County numbers

– After a slight rebound in September, Marion County saw single-family building permit applications drop in October, from 127 in 2021 to 83 this year, a 35% drop year-over-year. on an annual basis. Filings in the county are down 1% for the first 10 months of the year, to 1,147.

– Hamilton County, typically the most active county for homebuilding, saw filings drop 32% in October, from 200 to 137. Year-to-date filings are down 24% in the county, at 2,186.

– Hendricks County numbers fell 53% last month, to 53.

– Hancock County saw October permits drop 67%, to 38.

– Johnson County saw a 67% drop in filings last month, to 37.

– Deposits fell 43% in Boone County last month, to 45.

– Madison County filings fell 58%, to 32.

– Morgan County filings fell 40%, to 9.

– Shelby County was the only county in the Indy metro area to see filings increase, from 7 in October 2021 to 23 last month.

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