Sullivan, Carter counties are the muscle behind Q1 new home permits increase


  • Sullivan County has largest area y-y new home permit increases.
  • Washington County permits slightly off last year’s pace.
  • New home construction remains in slow-growth mode

New home permits saw a modest four percent year-over-year increase in the Tri-Cities region during the first quarter, and it was driven by activity in Sullivan and Carter counties. Although Washington County had the largest number of new permits performance was flat compared to last year.

On the surfaced new home demand is pacing what we’re seeing with existing home sales but the new home sector is performing at less than half of its pre-recession capacity. Some builders say “this is the new normal.”


Tri-Cities  new residential permits up 17.2%; builders don’t expect return to pre-recession level 


Those numbers come from The Market Edge’s just released residential building permit trend report.

Sullivan County was the muscle behind the Q1 regional gain. Carter County saw 13 new permits – a little better than double last year – while Sullivan County finished the quarter with 55 new permits up from to 34 last year.

The region had 157 new permits during the first three months of the year, six more than last year.

During a recent meeting of the Greater Kingsport Area Homebuilders Association meeting, Market Edge’s President Dale Akins rolled out a new permit projection model.  It put Sullivan County’s annual growth at a six percent this year. It also projected the region would see an increase of a little over 17 percent. If that holds, both the region and Sullivan County would see annual growth rates almost identical to 2015. It would also be two straight years of 17 percent new home permit growth. The region has not seen back-to-back annual growth years since the recession.

All indicators for Akins’ new model are positive with the exception of cumulative employment. Even though job creation and employment are currently increasing cumulative employment in the region is a little over 19,000 lower that it was before the recession.

In my opinion, the population indicator is overly optimistic. That’s based on the latest Census data.


Johnson City MSA gets most newcomers, population up; Kingsport- Bristol sees largest loss in state


Although they’re not part of the new Akins model, there are three other key indicators that give mixed signals on the local economy and new home demand. They include:

Johnson City metro

The bright spot is the metro area leads the region in household formation since the recession. The latest data has it up 8.9 percent.

At the same time, the labor participation rate has declined from 61.5 percent to 56.2 percent.

And real GDP is down 2.1 percent.

Kingsport-Bristol metro

Real GDP is the bright spot for Kingsport-Bristol. Although it has been trending lower for the past two years, it has increased 2.9 percent since the recession.

Household formation is basically flat. It has increased 0.3 percent since the recession.

The three housing demand drivers cited by the National Association of Homebuilders, the force behind increasing consumer new home demand, are very much at play in the Tri-Cities.  The region is seeing steady employment and job creation growth, mortgage rates are low and there’s ample pent-up demand. The National Association says builders are ready to step up to the increased demand, but there’re some pretty stiff headwinds like a shortage of lots, labor and tight access to construction and development loans.

The same headwinds are evident here. Locally the construction job sector is down a little more than 1,000 workers when compared to its pre-recession level. Builders also say there’s a lot of competition for the higher quality crews.

“Builders remain cautiously optimistic about market conditions,” says Robert Dietz, chief economist of the National Association of Home Builders, in a Spring Construction Forecast Webinar. “2016 should be the first year since the Great Recession in which the growth rate for single-family production exceeds that of multifamily. And we see single-family growth accelerating in 2017 as the supply side chain mends, and we can expand production.”

NAHB forecasters predict that single-family production will see a 14 percent uptick this year to 812,000 units, and then rise another 19 percent to 964,000 units in 2017.

If Akins’ projection for 2016 holds it would put the number of new home permits this year at about 950, which is a little better than the 2009 level. It’s also more than 50 percent lower than the area new home industry’s pre-recession performance level.

The high-end home section of the Q1 report shows seven new permits in Washington County and six in Sullivan. High-end is defined as a permit for a home with 4,000 or more sq. ft., or $400,000 or more construction cost.

Here’s a snapshot of the Q1 new permits compared to the same period last year by county:

  • Carter – 13 up from 6
  • Greene – 14, down from 20
  • Hawkins – 2, down from 4
  • Sullivan – 55, up from 34
  • Washington TN – 60, down from 68
  • Scott – 2, down from 5
  • Washington VA – 11, down from 14

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: