Tri-Cities new home permits up 17.5% so far this year

New Tri-Cities home construction – as measured by residential permits – was up 17.4% during the first nine months of this year placing it comfortably in a larger regional growth pattern.

Tri-Cities new homeAccording to the Market Edge’s Residential Building Permit Trend Report, the Knoxville region has seen the highest East Tennessee growth rate (20.8%) so far this year. The Tri-Cities ranked second  and Chattanooga saw the lowest rate (13.3%)  Two other regions local market watchers keep an eye on are Hickory, NC (17.6%) and Asheville (9.9%).

q3ytd new home permits

Q3 year-to-date new residential permits

Most of the Tri-Cities growth comes from new permits in Sullivan and Washington TN – the region’s largest counties.

Washington County TN has the highest permit growth rate and a big portion of that is being driven by Johnson City town home developments.

Sullivan County’s growth is the most modest of any of the region’s counties and it was driven almost entirely by single-family detached homes.

Carter County is the only jurisdiction that saw a Q3 and year-to-date permit decrease.

q3 new home permits

Q3 new residential permits

Despite the fact that new homes are selling at a steady pace, construction has not seen the recovery of the existing home sales market.

Just four of the seven counties Tri-Cities counties monitored the Market Edge are performing at better than half of their pre-recession capacity.

Those counties are Greene (48.1%), Sullivan (44.4%) Washington TN (45.3%) and Scott Co. VA (48.3%).

From a regional perspective, new home permits so far this year at 51.3% below what they were during the first nine months of 2008 – the year before the Great Recession hit the local markets.  But the 2008 permit level isn’t really indicative of the region’s historical new home construction performance because many of the local builders saw conditions deteriorating and had already been scaling back from the 2006 and 2007 levels.

One reason for the slow new home recovery has been the tight credit due in the wake of the recession.  That put the brakes on Tri-Cities builders since it’s a market where small builders build spec homes rather than larger developers driven by institutional investments.

Some market watchers think that the current level and mix of single-family, town home and apartments have set a new benchmark for normal given current economic conditions.

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