Residential construction: Here’s the time from permit to completion

Real Estate | 28 Jan |

The building of a residential structure take time. The U.S. Census Bureau Building Permits Survey and the Survey of Construction provide information on the length of time from when a permit is issued to the start of residential construction and then from the start of construction through completion for new private residential buildings.

The data are monthly and available for the U.S. and the four Census regions. If construction begins in the same month the permit is issued then the length of time is zero. Further, some places allow construction to begin before the final permit is issued. This would result in a negative amount of time from permit issuance to the initiation of construction.

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Nationally, residential construction tends to begin soon after the permit is issued. For single-unit structures in 2019, the average time was 1.1 months between permit issuance and the start of construction. As Exhibit 1 shows, the time from permit to start of construction has risen from 0.6 months in 1976 to 1.1 months in 2019. The wait for built-for-sale structures in 2019 was 1.0 months. For contractor-built structures the wait was 1.2 months and the wait for owner-built structures was 1.4 months.

Exhibit 1 also shows that the time from authorization to start of construction is generally a little longer for multi-unit structures. The wait for all multi-unit structures was 1.9 months in 2019. Wait times varied across the size of the structure. For structures with 2-4 units the wait was 1.7 months. For structures with 5-9 units the wait was 2.0 months. For structures with 10-19 units the wait was 2.3 months. Finally, the wait for structures with 20 or more units was 1.8 months.

Exhibit 1: U.S. Average Time from Permit to Start of Construction, In Months, U.S. Recessions Shaded

Exhibit 1: U.S. Average Time from Permit to Start of Construction, In Months, U.S. Recessions Shaded

Exhibit 2 shows the average length of time from the start of construction to completion for the U.S. In 2019, the average time was 7.0 months for a building with one unit. Time ranged from 6.1 months for built-for-sale structures to 8.9 months for contractor-built structures to 12.3 months for owner-built structures.

Multi-family structures take longer to complete. The average time for all multi-unit structures in 2019 was 15.4 months, which ranged from 12.6 months for 2-4 unit structures to 17.2 months for structures with 20-or-more units.

Exhibit 2: U.S. Average Time from Start to Completion, In Months, U.S. Recessions Shaded

Exhibit 2: U.S. Average Time from Start to Completion, In Months, U.S. Recessions Shaded

Variation in the time from permit to completion of construction is driven by a wide variety of influences reflecting both supply-side and demand-side factors. For instance, as demand rises, it may create temporary bottlenecks in labor markets and supply chains that increase the time between a permit and the completion of construction.

 

George W. Hammond, Ph.D., is director and research professor for Eller College of Management’s Economic and Business Research Center.

 

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