Metrostudy’s 2Q16 field research on the Atlanta housing market revealed that builders started construction on 5,977 new homes this quarter, up 8% from 2Q15 construction starts and jumped up by 21% from last quarter. Atlanta’s single-family annual starts totaled 20,449 units over the 12 months ending in 2Q16, up 13% YoY, and is at its highest construction starts level in 8 years.
Atlanta saw quarterly new home closings increase by 18% year-over-year to 5,419 in 2Q16, and annual closings were up by 16% from 2Q15, increasing to 18,932 new homes sold over the past 12 months.
“Overall we predict construction starts to remain ahead of new home closings in the Atlanta market at least for the next 12 months since the economy is relatively strong which will keep the housing market in a growth mode”, said Eugene James, Senior Regional Director for Metrostudy, a housing intelligence company that researches the residential real estate market all over the country.
“Resale inventory has been below normal levels for the past three years, ranging from about 3 to 4 months of supply. A normal and healthy months’ supply figure would be about 6 months” said James. “The low existing inventory supply has helped to fuel the demand for new homes throughout Atlanta”, said James.
An excellent measurement for demand of new construction homes is the Finished but Vacant housing inventory Months of Supply. Finished new home inventory declined by 9% from the prior quarter and now stands at 4,081 units. But most importantly the finished inventory months supply declined to 2.6 months. A normal level for this region is about 3 to 3.5 months.
Although Atlanta still has more finished buildable lots on the ground than anywhere else in the U.S. the lot inventory and months supply varies greatly from one part of town to the next. In general the lower lot supplies are in the northern counties and are as low as 12 months in parts of Forsyth, Gwinnett and Cherokee counties. A healthy months supply for this region had ranged from 18 to 24 months. But even the south side is seeing its lot inventory beginning to decline more rapidly due to a recent surge in new construction activity (starts were up 20% from the previous year). The overall Vacant Developed Lot months supply number is ridiculously high (laughable at 104 months) but in communities where construction has come back to life over the past year, the VDL months supply numbers have fallen to as low as 12 months or less for many subdivisions.
“The local and national labor market has been performing fairly well and consumer confidence is good,” said James. “These factors, along with low interest rates, are keeping demand for housing in Atlanta higher than supply, and home prices will continue to increase this year.”