We’ve been able to gauge buyer interest and builder demand for new lots in 36 major markets every month since September 2014, thanks to the Metrostudy–BUILDER Demand Index. Across all markets, the average demand for new lots consistently has remained high due to supply constraints and inflated prices in many major markets.
Conversely, buyer demand for new homes has increased marginally over the years, as consumer confidence in the market and the economy have changed. However, the average demand for new homes across all 36 markets has maintained an upward trajectory every month since January 2016, the longest upward streak seen since 2014, and a sign that the recovery is in full swing.
In July, the average new home demand score reached 7.30 on our 10-point scale, the highest reading since the inception of the index. July’s score is 9.96% higher than a year prior, when the average score was 6.64, and 22.23% higher than the average score in September 2014 (5.97), when the index started.
In Las Vegas, where demand has increased most year over year, regional director Greg Gross reports that the increase in demand (and the resulting increase in builder activity) has given buyers more options to consider and could be slowing conversions. However, buyer traffic is at a four-year high and all signs point to continued growth.
While Albuquerque, N.M., and Boise, Idaho, are by no means
major-demand markets, they have shown surprising growth compared to a year prior. Albuquerque regional director John Covert
reports that the recovery is happening, it's just slow going. More homes were started in the market in the second quarter than at any time since 2009, and in Boise, annual starts have increased 25%.
Ironically, typical markets that bolster the overall average for new-home demand, such as Denver, the Bay Area, Austin, and Seattle are starting to see demand slip—a result of new- and existing-home prices reaching all-time highs.