{"id":182624,"date":"2025-05-07T12:49:42","date_gmt":"2025-05-07T18:49:42","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=182624"},"modified":"2025-05-07T12:50:39","modified_gmt":"2025-05-07T18:50:39","slug":"building-permits-slow-nationally-while-select-markets-heat-up-q1-2025","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/building-permits-slow-nationally-while-select-markets-heat-up-q1-2025","title":{"rendered":"How Confident Are Builders? Q1 Data Reveals Insights"},"content":{"rendered":"\n

Every month, the NAHB\/Wells Fargo Housing Market Index (HMI) tracks <\/span>the sentiment of homebuilders<\/span> nationwide. Rated from 0 to 100, a score greater than 50 indicates builders are optimistic. <\/span><\/p>\n\n\n\n

Below is a graph of this sentiment score since 2015:<\/span><\/p>\n\n\n\n

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NAHB\/Wells Fargo Housing Market Index<\/a><\/em><\/figcaption><\/figure>\n\n\n\n

You can visually see that <\/span>the score has oscillated since the second half of 2022 (when interest rates hiked). This, combined with additional supply coming online, has dampened builder optimism. And all the headlines around tariffs haven\u2019t helped either.<\/span><\/p>\n\n\n\n

So why does this matter? If homebuilders are more pessimistic about the market, they will build fewer housing units. <\/span>This<\/span> isn\u2019t so good for those trying to get into the market, as prices of single-family homes aren\u2019t likely to go down. However, this is likely good news for existing investors, as lower supply likely means more <\/span>appreciation<\/span><\/a>.<\/span><\/p>\n\n\n\n

Because real estate is hyperlocal, let\u2019s drill down and see which markets have the most optimistic builders.<\/span><\/p>\n\n\n\n

New Building Permit Data<\/span><\/h2>\n\n\n\n

Every month, the U.S. Census publishes how much supply <\/span>was permitted<\/span> in every market in the Builder Permits Survey (BPS). <\/span>This<\/span> can <\/span>be a good indication of<\/span> how confident builders are in the market’s demand for housing units.<\/span><\/p>\n\n\n\n

To gauge builder confidence at the market level this year compared to last year, I looked at how many units have <\/span>been permitted<\/span> year to date (so, all units permitted for Q1 2025) and compared this to the year-to-date units permitted at the same time last year. In English: I compared the supply permitted in Q1 2025 to Q1 2024.<\/span><\/p>\n\n\n\n

Yes, I know. <\/span>Just because supply <\/span>was permitted<\/span> in a given quarter doesn\u2019t mean <\/span>that<\/span> it was the same quarter <\/span>that<\/span> builders intended to build.<\/span> I think it\u2019s fine to disregard these semantics and <\/span>just<\/span> focus on comparing apples-to-apples data.<\/span> <\/span><\/p>\n\n\n\n

Take a look at the markets with the <\/span>largest<\/span> difference in supply permitted in Q1 of this year to last year:<\/span><\/p>\n\n\n