According to a new study from Point2, an international real estate search portal that is a division of real estate software company Yardi Systems Inc., Utah is following the national trend of fewer building permits and housing starts. The report found that Utah had a drop of 19.4 percent in 2022 compared to 2021.
Point 2 said the most recent banking troubles, rising inflation and prohibitive mortgage rates are some of the issues affecting the current housing market. And the latest data supports the fact that the market is losing momentum: While the number of completed units has increased every year since 2012, permits and housing starts are dropping nationwide.
To get a deeper understanding of how housing construction and construction employment trends evolved over the past decade in Utah, Point2 analyzed historical data on permits, completed and started units, along with employment, incomes, and business data. The report is accompanied by an extensive resource page at https://www.point2homes.com/news/residential-construction-data, high-lighting the year-over-year changes in residential construction over the past decade in all the states and 384 U.S. metros.
The report said Utah saw a 22.92 percent increase in permits in 2021, mostly driven by a whopping 54.47 percent increase in multi-family permits as well as a smaller 9.51 percent increase in single-family permits. Out of the 39,058 permits issued in Utah, 11,642 were for the Salt Lake City metro alone. However, permitting activity in the state slowed down in 2022, falling 19.4 percent. Only 31,498 were issued last year. The decrease was most likely caused by a drop in permits for single-family and 2- to 4-unit buildings.
Permits have been on an upward trend in Utah over the past decade. In fact, the 2022 drop is the first significant decrease since 2012.
2022 also saw Salt Lake City metro’s first drop since 2018. The number of permits decreased by 14.85 percent. This was likely caused by a slowdown in single-family authorizations, which make up a little less than half of the total number of units. On the other hand, permitting activity for units in multi-family buildings with more than five units increased, going from 5,290 permits in 2020 to 5,932 in 2022.
In line with the state’s overall trend, medium metros also saw year-over-year drops in the number of permits issued in 2022. Provo-Orem recorded a 25.93 percent decrease in number of permits, while Ogden-Clearfield saw a 33.7 percent drop. Both metros saw increases of almost 40 percent in 2021.
Permits also went down in smaller metros like St. George and Logan — by 8.41 percent and 15.81 percent, respectively.
The study also found that, in Utah, the total number of employees active in the construction industry represents almost 8 percent of all active employees. That number kept growing for the past decade, going from 69,225 in 2012 to 130,158 in 2022. Construction-related businesses also grew by 56.19 percent in 2022 compared to 10 years ago, Point2 reported.
Nationwide, St. George and Provo-Orem are among the metros that have the highest shares of construction employees out of the number of employed people within the metro — above 10 percent.