The first-quarter Metrostudy data for the Raleigh-Cary, North Carolina market shows an increase in new-home sales and shortage in Vacant Developed Lots that will continue to drive up prices in a high demand area. New-home sales hit 1,298 in the first-quarter, down from 1,670 in 4Q13, but still a 13.3 percent increase from 1Q13 sales at 1,145. The market also experienced a slight increase in the sale of existing homes between 1Q13 and 1Q14.
Prices are slowly rising in the Raleigh market due to new-home demand, but the rise is not as significant as other hot markets around the country that are also rising pricing out of reach for the entry-level buyer. In 1Q14, the median closing price for new homes was $280,300, a nine percent increase from 1Q13 when the median price was $256,700. The price hike in Raleigh was even less significant between 4Q13 and 1Q14 at just a 3.4 percent rise.
According to Jay Colvin, Metrostudy’s regional director for the Raleigh-Durham market, “The new home market has been a little challenging. The positives that have driven people to the Triangle [the nickname for the Raleigh area], have also attracted home builders. The Triangle is one of the most competitive homebuilding markets in the country. The top 25 builders only capture 62 percent of the demand. That top 25 list is not just made up of the largest national homebuilders (13 of the largest market cap builders traded on the NYSE are here), but also by very large and competitive local and regional homebuilders.” Months supply of both Housing and Vacant Developed Lots in the market are decreasing, marking demand. Months supply of housing for the first-quarter 6.6, down from 7.3 a year earlier. VDL months supply decreased from 37 in 1Q13 to 25.2 in 1Q14, a 32 percent decrease.
“Land developers have not been attracted to the market, or at least in the traditional sense of the term, as most new development is either builder self-developed or fee-based development,” says Colvin. “Vacant Developed Lot supply is critically low in the region, and new lot development is not keeping pace with demand. This is in turn driving up prices on land and in turn homes, which is causing some prospective home buyers to remain on the side lines. The demand is here, and plenty of it. The supply and the ability to increase supply are not. This is the biggest challenge in housing facing the Triangle’s and, in my opinion, the nation’s near-term future.”
Learn more about markets featured in this article: Raleigh, NC.