New Construction Permits Decline in May, Up 3% YTD

While permits for new single family housing units increased 6.5% nationally and 8.8% in the south region, they decreased in Alabama during May. Single family permits decreased 15.8% year-over-year (y/y) from 1,288 in May 2018 to 1,159 in May 2019. Permits may be down in Alabama y/y, but they are up 2.7% year-to-date (YTD). This goes against regional and national trends where permits are down 3% and 6.2% respectively.

Permits in Alabama are now up on the year since January 1st thanks, in part, to impressive growth in Huntsville and Mobile’s new construction market. Even with a drop in May, permits are now up 17.6% YTD in Huntsville and 19.1% in Mobile. The Huntsville metro area leads the state in total permits in 2019, with 1,419 through May, while the Birmingham-Hoover metro area is second with 1,190. This is very impressive when one considers the population estimates for both areas: 455,000 in the Huntsville metro area and 1,130,000 in the Birmingham-Hoover. Additionally, many economic projects are underway, including the Toyota Mazda manufacturing facility that will produce 4,000 plus jobs when production begins in 2021. These strong economic development projects will give added energy to an already strong new construction market as population and job growth continue to trend upwards in the area. Huntsville’s population is estimated to overtake Birmingham within the decade so we can expect permits for new single family housing units in this area to remain strong in the future.

However, the boom in new construction activity in north Alabama is not limited to Huntsville. With a strategic location along the Tennessee River, access to two Class I railroads (Norfolk Southern and CSX), and nearby I-65 it is no surprise that 12 Fortune 500 companies have invested in the Decatur area. Moving to the southwest region of the state, Mobile has also experienced a rise in new construction activity as permits are up 19.1% YTD. The Port of Mobile being the only deep-water port in the state of Alabama as well as its access to the Gulf of Mexico makes it an ideal location for container shipping companies and other major corporations to be located.

Other markets in the north Alabama region with significant permit gains include Aniston-Oxford-Jacksonville (up 19.2% YTD) and Gadsden (up 42.1% YTD). As the region’s economy continues to grow and diversify, expect cities in the north Alabama region to continue to lead the state in permit growth rates. Of Alabama’s 12 metropolitan areas, only 3 have YTD permit declines in 2019: Daphne-Fairhope-Foley (down 5.3%), Dothan (down 11.5%), and Tuscaloosa (down 11.8%)

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