According to Metrostudy’s quarterly lot-by-lot survey of every subdivision in the Salt Lake City region, there were a total of 2,797 new home starts (for attached & detached product) during 2Q16, a 19% increase over 2Q15, and up 25% from 1Q16. There were 2,378 new home closings during the 2nd quarter, which is a 19% increase over last year, and 14% above last quarter. Annual new home starts as of June totaled 10,025, a 23% increase compared to last year. Annual new home closings have increased 22% over last year’s pace for a total of 9,272. Also, year to date starts are 19% above the first half of last year, signaling that the housing market is firing on all cylinders. Annual starts for Single Family detached homes increased 23% for a total of 7,332 as of June, and annual closings totaled 6,713, up 19%. Annual starts for Attached (for sale) homes totaled 2,693, a 20% increase, and closings jumped 30%, for a total of 2,559.
According to Eric Allen, Regional Director of Metrostudy’s Utah/Idaho region, “Approximately 43% of all new home starts in the market are priced below $300,000, this compared to the 49% market share that existed last year at this time. And, annual starts in this segment have only increased 7% compared to last year, while production above $300,000 has increased 33%. The median price for a new Single Family home is currently $347,000, which is 4% higher than last year and 1% above last quarter. The median price for a new Attached unit is $224,400 which is a.1% increase from last year, and up 1% from last quarter.”
As of June, there are 6,128 new homes in inventory, (for attached & detached product) which is a 7.9 month supply, down from 8.5 months last year at this time, and up from 7.7 months last quarter. New home inventory for Single Family Detached homes has increased 17% in the past year and currently has a 7.2 month supply, down from 7.3 months in 2Q15, while up from 7.1 months last quarter. Under construction inventory continues to grow rapidly, however remains near the bottom end of equilibrium with a 5.8 month supply, this up from 5.3 months in 2Q15. The total number of detached homes under construction has increased 30% compared to last year for a total of 3,269. While this rapid increase may make some nervous, finished vacant inventory is below equilibrium and the market is starved for more available inventory. With that said, finished vacant inventory levels have decreased 20% since last year and 8% from last quarter for a total of 548 homes, a 1.0 month supply.
Under construction inventory for townhome units has increased 19% from a year ago to 1,249, which is a 7.0 month supply, up from 6.4 months recorded last quarter. Finished vacant inventory has decreased 28% from last year to 213, and 13% below last quarter, which is a very low 1.2 month supply. Builders are finding it difficult to keep much inventory on the ground as buyers have been closing on these units as soon as they are ready. Under construction inventory for Condos increased 36% over last year to 434, a 12.6 month supply. However, finished vacant inventory decreased 29% to 124, which is a 3.6 month supply.
There have been a total of 8,487 new lots delivered to the Greater Salt Lake market over the past year, which is 6% more than last year at this time. Year to date deliveries are up 13% compared to the first half of 2015, which is a step in the right direction as builders have been dealing with a lack of available lots for some time now.
The Wasatch Front MLS reported annual used home closings totaled 37,398 as of June, an 11% increase compared to this time last year. Based on the current number of homes listed for sale, there is a 2.2 month supply, which is down from 3.2 months a year ago. The average days on market has decreased to a very low 18, down from 24 days recorded last year at this time.
“The Greater Salt Lake market has experienced very rapid growth the first half of 2016, and despite the global and national pressures, the market remains healthy,” said Allen. “While we are anticipating production in the second half of the year to level off (to some extent), the market will have the strongest year since prior to the recession and should exceed 10,000 annual starts.”
For further analysis of the Salt Lake City market, reach out to senior director Eric Allen: firstname.lastname@example.org