The BUILDER / Metrostudy Demand Index provides local insight from Metrostudy Regional Directors in 35 markets across the country in the form of a 1-10 score (1 low, 10 high) every month.

Between May and June, the average demand score for new homes and lots across all 35 markets declined, but stayed close to average levels month-over-month. The average demand for new homes decreased from 6.7 in May, to 6.6 in June, and lot demand slid from 7.3 to 7.1.

Demand for New Homes

Seven regional directors reported higher demand for new homes in June, though the incremental change didn’t exceed more than one point in the index. Nine directors reported a decrease in demand, with the Chicago market sliding the most—two points down the scale month-over-month. The Phoenix and the Rio Grande Valley continue to be the weakest markets for new home demand, (as well as lot demand) and May levels remained unchanged in June.

Demand for New Building Lots

In the majority of markets, the availability of affordable lots is still the number one pain point regional directors identify when gauging a market’s score for new building lot demand. Demand for new lots decreased in 10 markets month-over-month, not because there’s an abundance of supply, but because builders are starting to hold off on land deals, hoping that landowners may lower prices.

David Cobb, regional director of the Naples-Ft. Myers market, reported the largest decrease in demand for new lots between May and June, sliding from a 10 to a 7 on the scale. “[I’m] beginning to see some deterioration in are attempting to negotiate escalators and take downs,” Cobb says. “[Land] sellers still think the land market is great, but reality will strike soon.”

Thankfully, the sticker shock that is evident for builders/developers, and prospective homebuyers alike illuminates the potential for future growth in the new home market—price may be a major impediment, but builders and buyers are still looking. They’re just holding out for a balance between the two before taking the plunge.

Learn more about markets featured in this article: Phoenix, AZ.