Metrostudy’s 3Q14 survey of the Greater Salt Lake market shows that while the housing market has been experiencing some slowing in the last few quarters, new home production remains healthy. According to Metrostudy’s quarterly survey, there were a total of 2,125 new homes (both attached and detached) started during 3Q14, which is a 16 percent decrease compared to 3rd quarter last year, however increased plus 13 percent from 2Q14. Closings for the quarter dropped 1 percent compared to last year and increased 9 percent from last quarter, for a total of 2,049. The pace for annual new home starts has declined for the past two quarters, causing a bit of concern within the industry. Annual starts totaled 7,739 at the end of September, -3 percent fewer than last year at this time.
Annual new home closings have increased 4 percent compared to 3Q14, however the pace slowed 0.3 percent from last quarter, to 7,694. Annual starts for Single Family detached homes have decreased 7 percent compared to last year at this time for a total of 5,711. However, new home closings have increased 3 percent over 3Q13 for a total of 5,734.
Attached (for sale) homes continue to be the shining star in the market with a 15 percent increase in annual starts over last year with 2,028. Annual new home closings totaled 1,960 as of the end of September, up 8 percent over last year at this time.
“The mix of buyers has been heavily weighted towards the move-up market, leaving the entry-level buyer somewhat depressed, due to the rapid increase in prices and difficult lending environment,” said Eric Allen, Director of Metrostudy’s Utah and Idaho region. “This trend continues as annual starts above $300,000 have increased 17 percent over last year, while the pace has decreased 19 percent for starts under $300,000. While new home prices have increased very rapidly for the past few years, the pace appears to be slowing ever so slightly. The median price for a new Single Family home has increased 9 percent from last year at this time to $330,900, and is one percent above last quarter. The median price for a new Attached unit currently sits at $208,400 which is 7 percent higher than last year at this time, and one percent above last quarter.”
As of September, there is a 6.7 month supply of single family detached home inventory in the Greater Salt Lake market, which is down slightly from 7.0 months at this time last year, and up slightly from the 6.6 months recorded last quarter. Under construction inventory decreased 9 percent compared to last year at this time; however increased 4 percent from last quarter, and currently has a 4.8 month supply. Finished vacant home inventory has increased 32 percent from last year, however decreased 7 percent from last quarter to a 1.5 month supply. This is up from only 1.1 months at this time last year, and down from 1.5 months last quarter. There is currently a 9.0 month supply of townhome units in inventory, which is up from 8.7 months recorded last year in 3Q13. Of this, 912 are under construction, a 6.5 month supply. There are also 273 finished vacant units on the ground, which is up 34 percent from last year, and is a healthy 2.0 month supply. Condo inventory totaled 732 units, which is a 30.2 month supply.
Inventory of vacant developed lots (VDL), or finished lots, for single family detached homes have recently leveled off with 15,343, virtually unchanged from last year. While overall lot inventory is essentially unchanged over the past year, lot deliveries have increased to the highest levels since 2009,” said Allen. “There have been 7,773 new lots delivered over the past year, compared to 4,893 in 3Q13. Despite the spike in deliveries, lots are being absorbed quickly, particularly for homes priced from $200,000-$400,000, where the supply remains within equilibrium at 19.2 months, while lot inventory for homes above $400,000 is 54 months.”
“Metrostudy expects demand to remain relatively steady for the next year, despite the pressures from lack of supply, rising prices and the possibility of increased interest rates,” said Allen. “The market is simply experiencing a cooling off period, coming off the heels of one of the most rapid recoveries on record.”