Metrostudy’s 3Q14 survey of the Boise / Treasure Valley housing market shows that while we have experienced some slowing in the past few quarters, new home production remains relatively strong when compared to the historical average. According to the survey, there were 823 new homes (both attached and detached) started during 3Q14, down 19 percent compared to 3Q13, and another one percent from last quarter. New home closings totaled 950 during the quarter, a one percent decrease from last year at this time, however increased 28 percent from last quarter, signaling that demand for homes remains strong.
Annual new home starts have decreased nine percent compared to last year’s pace for a total of 3,045 and annual closings are down three percent to 3,092. Ada County started 578 new homes during 3Q14, which is down 22 percent compared to 3Q13, and another four percent decrease from last quarter. Annual starts decreased 12 percent from last year to 2,231. There were 700 new home closings during 3Q14, down only four percent compared to last year, however up 28 percent from last quarter. Canyon County started 231 new homes during 3Q14, which is down 11 percent compared to last year, however up six percent from last quarter. Closings during the second quarter decreased six percent compared to last year, however increased 27 percent from last quarter, for a total of 233. Annual new home starts decreased once percent over the pace last year to 787 and annual closings are up 12 percent, for a total of 769.
“As in other parts of the region, the new home market is now heavily weighted towards the move-up buyer, leaving the entry-level buyer at a disadvantage, due to the rapid increase in prices and tightening lending environment,” said Eric Allen, director of Metrostudy’s Utah/Idaho region. “Annual starts above $300,000 have increased 37 percent over last year, while the pace has decreased 25 percent for homes under $300,000 compared to the same time. Demand for homes in the market remains strong, and low inventory levels have contributed to the rapid increase in prices. The median price for a new home in Ada County is $285,3000, up 20 percent over last year and four percent from last quarter. The median price in Canyon County has increased 12 percent over last year to $180,300 and up another two percent from last quarter.”
As of September, there is a 5.6 month supply of new single family detached homes in the Treasure Valley market, which is unchanged from last year, but down from 6.0 months last quarter. Inventory for homes under construction declined 11 percent compared to last year at this time, and five percent from last quarter. Currently this is a 3.2 month supply, down from 3.6 months in 3Q13. Finished vacant home inventory has increased 15 percent from 3Q13, however decreased 11 percent from last quarter. Due to the increased absorption (closings), the supply of finished vacant homes dropped from 2.4 months to 2.1 months currently. There is also a 10.1 month supply of attached home inventory on the ground. Under construction inventory calculates to a 5.8 month supply, with an additional 5.8 month supply of finished vacant homes/units on the ground.
Inventory of vacant developed lots (VDL), for both attached and detached homes in Ada County has increased 17 percent over last year and seven percent from last quarter, and translates to a 26.6 month supply. Vacant developed lot inventory in Canyon County is down 10 percent from last year. Based on the current pace of absorption, this is a 56.0 month supply, which is down from 61.2 months recorded in 3Q13. There have been 3,050 new lots delivered over the past year, compared to 1,504 in 3Q13. Despite the spike in deliveries, “good” lots are being absorbed quickly, and need to be replaced.
“Metrostudy expects demand to remain relatively steady for the next year, however there are some indicators that will continue to put pressure on the market, primarily those being lack of supply, higher prices and interest rates,” said Allen. “The market is experiencing a cooling off period compared to the rapid growth over the past three years, but is not cause for concern as long as jobs keep pace.”