How many new homes are being built so far in 2008? Has the slowing real estate market and the troubled economy hurt the building industry? No doubt it has, but the picture is brighter than I might have thought just by reading headlines and listening to the talking heads.

I’ve tracked building permits issued by Clallam County from 2005 through September of 2008, and here are the results:

I’ve included data for single family stick-built homes, manufactured homes, and duplexes.  We see again proof that 2005 was a banner year in real estate with 359 permits issued for homes.  Since then we have a steady decline, and for the first nine months of this year, we have 160 building permits.  Annualizing this number would give us a rough equivalent to the number issued last year, but I suspect that the remainder of this year will see fewer permits with the year ending at about 190 building permits.

This is good news.  You would have thought no one was planning to build a home, but in fact many are, an average of about 17 each month.  That’s not a big number, but in little Clallam County, that’s a positive number in the worst real estate market in decades.

I’ve included data for manufactured homes to show they are still a factor for many retired couples moving here.  I also included duplexes only to show that we have virtually no duplex market here at all.  That may answer a few questions for investors who email me asking about duplexes.

[Source of Data:  Olympic Listing Service]

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New construction of homes in Sequim and Port Angeles has slowed with the pause in the real estate market, but exactly what does the volume of new construction look like recently, and how does that compare to the historical record? Here is the data. Click on Graphs to Enlarge.

For the same time period, the average sales price is represented by this graph:

New construction from 2000 through November of 2007, which gives us the bigger picture is represented by the following two charts, first sales volume and then average price. Click on Graphs to Enlarge.

Data courtesy of Real Market Data. One caveat regarding the definition of “new construction” in their data: New construction only includes first time sales of land and home together. In other words, new construction is when a builder owns the lot and builds a house and sells the package together. Their data does not include the construction of a new home on land purchased separately. That could include a significant percentage of the market in Clallam County as many people first purchase their lot and then hire a building contractor. Probably what is most significant about the data in these charts is the trend. The depiction of this trend is probably a good reflection of the overall new construction market.

Sales volume appears somewhat erratic from month to month, but that is because this is a small market compared to Pierce or King County. You will see one month at just over $1 million and another month over $3 million. The difference may be three or four houses, or it could be just one.

The longer history is probably the most revealing. Seven years ago the average price of new construction was about $150,000 and now it is about twice that at $300,000. The new construction momentum can be seen in this seven year volume history in 2004, 2005, and 2006. While we see a slow down in current months, 2007 was certainly respectable. It remains to be seen how this coming season of new construction going into the spring of 2008 will develop.

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