The Des Moines area experienced a 5.5% increase in 2023 in the number of building permits issued for new home construction, a review by the Business Record shows.

Overall, 3,422 permits for new home construction were issued last year in Polk County and 13 communities, the review shows. In 2022, 3,243 permits were issued; in 2021, 4,361 were issued.

The average value of new home permits issued in 2023 was $323,972, the review shows.

(The Business Record reviews permits issued in Des Moines, Altoona, Ankeny, Bondurant, Clive, Grimes, Indianola, Johnston, Norwalk, Pleasant Hill, Urbandale, Waukee and West Des Moines.)

Each month, the National Association of Home Builders/Wells Fargo Housing Market Index measures home builders’ views on market conditions. Numbers over 50 indicate that more builders view conditions as “good”; numbers under 50 indicate a “poor” view of conditions.

In January, the index was 44, the highest it has been since September. January was also the third straight month the index has increased. In December, the index was 37.

A drop in interest rates for home mortgages has helped increase builder confidence, market observers say. Late last summer, interest rates for a 30-year, fixed-rate mortgage averaged between 7% and 7.8%, according to Freddie Mac. Last week, they averaged 6.63%.

“There’s a psychological difference between interest rates that are 7.5% or higher and those that are somewhere in the 6% range,” said Creighton Cox, managing owner of Urbandale-based C2 Consultants Inc. “I think if rates get closer to that 6% number, we’ll start to see more new home purchases, which could be a boost for home construction.”

More online: To view a spreadsheet that shows the number of building permits for new homes issued by area communities and the valuation of the permits, click here.