Builders Not Discouraged by October Permit Numbers

INDIANAPOLIS (November 21, 2022) – The Builders Association of Greater Indianapolis (BAGI) continues to complete home projects as annual building permit activity falls by 18 percent. According to BAGI, in October 457 permits were processed compared to 845 in October of 2021.

“These numbers are not surprising or discouraging,” said Steve Lains, CEO of the Builders Association of Greater Indianapolis. “Mortgage rates have been unusually low these past few years, so a shift back to 6 or 7 percent rates has led to a slowdown, or rather a return to normalcy, in the market.”

Lains and the Builders Association of Greater Indianapolis predicted a decrease in sales in a State of the Industry letter in August. According to the letter, builders are prepared to see construction home sales slow by 25 percent through 2023.

The housing market has undergone several unusual trends in the last two years, and experts expect the market to return a normal annual growth rate of 2 to 4 percent after further market correction though 2023.

“While material delays and supply chain issues continue to be a challenge, our largest obstacles right now are price inflation and land availability” explained Lains.

“The market is starting to become more balanced relative to supply and demand of materials and labor but covid-related price increases, combined with higher interest rates, have made it very difficult to meet the demand for the largest segment of homebuyers – those striving for homes in the price ranges that match the area’s average household incomes,” Lains said.