Building permits: new construction shows signs of recovery in March, without declaring victory

A striking figure that, in a sector accustomed to bad news, is raising a few eyebrows: in March, 43.144 building permits for housing were granted, a 33% increase in one month, according to provisional data from the Ministry of Housing and Urban Development. After months in which production seemed to be moving at a snail's pace, the announcement feels like a breath of fresh air.

The fact remains that the new housing market is emerging from a long period of turbulence. Since 2022, rising interest rates, more demanding lending criteria, construction costs inflated by inflation, scarce and expensive land, and evolving regulations (RE2020, ZAN) have put developers on a tight budget. Many projects have been slowed down, sometimes frozen, due to a lack of buyers to secure pre-sales. In this context, a monthly surge could also tell an administrative story, that of applications submitted earlier and approved en masse.

This rebound is not yet a restart. A permit is a promise, not a crane. Between the authorization and the first shovel of earth being turned, there are appeals, financing, the economic viability of the project, and the ability of households to keep up. The market has already seen permits pile up without translating into construction, especially when demand falters or banks tighten lending criteria.

A rebound on paper, the construction site as the ultimate arbiter

The next step will therefore hinge on housing starts, the decisive indicator. Industry professionals are hinting at it: as long as sales don't rebound strongly and visibility remains limited, the industry is proceeding cautiously, taking small steps. Even interpreting the statistics requires a measured approach: a single month is volatile; trends over three months or a year are a better indicator of whether the economy is recovering or still struggling.

Behind the national average, the reality is often more complex. Multi-family housing, which has been severely impacted in recent years, does not react in the same way as single-family homes, hampered by land prices and local constraints. High-demand areas, where the rental crisis is a severe blow, do not have the same room for maneuver as less pressured regions. And then there are the urban planning decisions related to land conservation, which can accelerate development in some areas and stall it in others.

This March spike also comes at a time when everyone is scrutinizing the cost of money and the public programs designed to streamline the housing chain, from first-time buyers to social housing providers. If interest rates stabilize sustainably and if regulations stop changing midstream, the permits could cease to be a flash in the pan. Otherwise, this surge will remain an isolated piece of good news, a ray of sunshine in a still-dark sky, before the reality on the ground delivers its verdict.