Construction of a new hospital in south Kennewick is driving demand for new houses in the Southridge area.
Kennewick has seen the bulk of the new single-family home permits so far this year -- up 26 percent to 225 new houses.
West Richland also is seeing more new homes being built.
And while Richland's home permits are down about 7 percent, new permits in Pasco have fallen 33 percent, after years of having record population growth fuel new home construction.
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As of August, home permits were issued for 775 homes throughout the Tri-Cities -- a 5 percent drop from the same point last year, according to data from the Home Builders Association of Tri-Cities.
But Jeff Losey, the association's executive director, said home permits are picking up as interest rates begin to rise, increasing pressure to lock in a rate before they climb higher.
Most homes built in the Tri-Cities are pre-sold and custom homes, he said.
Some homes are built on speculation of finding buyers, but lenders remain cautious about building too many of those, he said.
By year's end, he expects new home starts will be about the same as last year at 1,144.
Around 1,100 to 1,200 new homes in a year is a comfortable number for the Tri-Cities, Losey said. It's enough to keep subcontractors and contractors busy even if it isn't setting records.
In addition to the Southridge area, Kennewick is seeing development in about seven subdivisions in various parts of Kennewick, said Evelyn Lusignan, Kennewick's customer service manager.
That includes more homes in Hansen Park, the next phase of Fountain Hills behind Costco and Sagecrest in the Southridge area.
"It is exciting to see the number of new developments and housing options for our residents that complements our growing community," she said.
Pasco has seen a 33 percent decline to 159 homes as of Aug. 31.
Losey said that comes on top of a drop last year of about 35 percent. While Pasco has flat, easy to develop land, the cost to develop is higher because of impact fees to pay for schools and parks, he said.
However, Pasco officials discount impact fees as the cause of the decline in home starts. Instead, Rick White, Pasco's community and economic development director, said Pasco is getting to more of a normal level of new home activity for a city of its size, with about 250 new single-family homes in a year instead of 450 to 500.
Between 2003-06, Pasco's housing market boomed, with the city issuing about 1,000 building permits for single-family homes each year.
White said if the impact fees were to blame for the drop, he would expect to see more new homes built outside city limits in Franklin County. However, Franklin County also is down by 35 percent compared to last year, to 22 homes.
One reason for a decline in activity may be because there are fewer lots to choose from than there were a few years ago and no significant new subdivisions have been started so far this year, White said. Another possible issue is the crowding in Pasco schools, he said.
Richland's new home construction appears to be moving at a similar pace as last year, said Rick Simon, Richland's development services manager.
Just because permits are down now, doesn't mean the city will end the year that way since permitting tends to ebb and flow, he said.
In all, the city issued 180 new permits as of Aug. 31.
South Richland continues to see the bulk of the new home activity, as it has for several years, Simon said.
The first homes at Badger Mountain South are under construction, he said. The first phase of West Vineyards in the development will have about 156 lots. In all, the full Badger Mountain South development will have 5,000 lots.
West Richland has seen new homes mostly north of Paradise Way in the newer subdivisions of Sunset Ridge, Collins Heights, Collins Ridge and Paradise Estates, said Nicole Stickney, West Richland's planning and economic manager.
But new homes also are expected to be built north of Keene Road in the Hyde Park development, she said.
West Richland has issued permits for 116 new home this year, valued at about $29.8 million.
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