Home construction in the region shows little sign of slowing down any time soon because of continued growth in Northern Virginia, according to the number of construction permits that have been issued.

The total number of residential construction permits issued in May for the Washington-Baltimore-Hagerstown region fell for the first time since November 1998, according to statistics compiled monthly by Regis J. Sheehan & Associates, a McLean economics and consulting firm. But the drop came because of a fall-off in the volatile multifamily sector. Single-family house permitting rose for the 18th consecutive month. Building permits are an early indicator of construction activity.

The area is sharing in the nationwide boom in home construction that has lasted longer than economists dared predict. The reasons: Strong job growth and low interest rates, despite slight increases this year. The buoyant stock market is also helping to fuel building.

"In most areas, the biggest problems for builders have been getting the lots, labor and materials to build," said David Seiders, chief economist for the National Association of Home Builders.

Demand for housing not only has translated into new construction, but it also has led to increased prices for existing homes.

In May local governments in this region issued 4,295 residential construction permits, down 15 percent from a year earlier. The entire decrease, though, was in multifamily permits. Because a single apartment building can require hundreds of permits, the numbers can swing dramatically from month to month. "The apartment market is still very tight. That number could bounce back up in a month," said Robert Sheehan, president of Sheehan & Associates.

Single-family permits issued rose 7 percent, to 3,603 units, with the activity occurring in areas where job growth is flourishing. In Northern Virginia, where job creation has been most robust, single-family permits rose 47 percent, to 1,702 from 1,159 a year earlier.

However, the number of single-family permits issued in Washington's Maryland suburbs fell 31 percent. In Baltimore and its suburbs, single-family permits fell 11 percent.

The number of permits issued in the District is so small -- nine in May, compared with three in May 1998 -- that any movements up or down are insignificant. Hagerstown and the two West Virginia counties that the Census Bureau considers part of the expanded region also have relatively few starts.

Sheehan predicted that the rise this year in interest rates could soon slow demand at least a bit.

Along with other housing economists, Seiders confidently predicted in January that home construction nationally would fall somewhat from last year's record levels. Throughout this year, though, builders have started homes at a rate that outpaces 1998.

Seiders still sees a cooling off by the end of the year, although he said the Federal Reserve's recent signal that it is not leaning toward more interest rate increases in the near future and a recent bounce in the stock market could continue to prop up housing demand.

"We're doggedly insisting that the stock market is likely to lose some ground between now and spring," Seiders said. "One of the things we did not anticipate was another binge in the stock market."

Boom or Bust?

Residential building permit activity for the Washington metropolitan area in May:

Washington area

1999: 3,120

1998: 3,663

% change: - 14.8


1999: 9

1998: 3

% change: 200

Maryland suburbs

1999: 989

1998: 2158

% change: - 54.2

Frederick County

1999: 144

1998: 198

% change: - 27.3

Montgomery County

1999: 417

1998: 955

% change: - 55.3


1999: 16

1998: 463

% change: - 96.5

Prince George's County

1999: 235

1998: 804

% change: - 70.8

Virginia suburbs

1999: 1975

1998: 1413

% change: 39.8

Arlington County

1999: 7

1998: 1

% change: 800

Fairfax city

1999: 397

1998: 464

% change: - 14.4

Loudoun County

1999: 518

1998: 297

% change: 74.4

Prince William County

1999: 394

1998: 188

% percent: 109.6


1999: 97

1998: 125

% percent: - 22.4

Falls Church

1999: 1

1998: 1

% percent change: 0


1999: 7

1998: 5

% percent change: 40

SOURCE: U.S. Department of Commerce; Regis J. Sheehan & Associates