According to Metrostudy’s quarterly survey, there were a total of 361 new homes – both attached and detached - started during 2Q14 in the St. George, Utah market, up 16% compared to 2Q13, and up 2% from 1Q14. New home closings totaled 319 during the second quarter, which is 13% more than last year at this time, however 10% fewer than last quarter. Annual new home starts have increased 33% compared to last year’s pace, for a total of 1,549 homes. Annual closings totaled 1,390 as of June, which is an increase of 27% compared to the pace last year.
The Mesquite market area started 41 new homes during the second quarter of 2014 which is up from 22 starts during 2Q13. Annual starts as of June totaled 210, which is an increase of 49% compared to this time last year when there were 141. Quarterly closings totaled 71 during 2Q14, up 97% from the 36 closings in 2Q13. Annual closings totaled 217, which is a 55% increase compared to the pace last year at this time.
“Escalating home prices are continuing to keep many entry level buyers out of the market, as fewer consumers are able to qualify for a home,” said Eric Allen, Director of Metrostudy’s Utah/Idaho Region. “Rising prices are keeping would-be buyers in a rental holding pattern. The median price for a new detached home in the St. George market is $349,400, up 16% from a year ago. The median price for an attached unit is $137,900, up 5% from last quarter. The median new home price in Mesquite is currently $211,100 which is up 5% from last year at this time.”
As of June, there is a 5.7 month supply of single family detached homes in the St. George market, which is up from 5.1 months recorded at this time last year. Under construction inventory for detached homes increased 25% compared to last year at this time, however dropped 3% from last quarter. This total calculates to a 3.8 month supply, which is down from 4.0 months recorded last quarter. There are 168 finished vacant homes on the ground, an 83% increase from 2Q13, and 30% above last quarter.
“Despite the increase in inventory, the supply remains healthy at 1.6 months, up from 1.1 months in 2Q13,” said Allen. “So far, closings have kept pace with the market, resulting in a healthy level of finished vacant homes, however it will be imperative to monitor as we push into the second half of the year.”
New detached inventory in Mesquite increased 6% from a year ago, however down 4% from last quarter. The current total calculates to a 5.8 month supply, which is considered to be within equilibrium. Under construction inventory decreased from a 1.7 month supply recorded last quarter, to a current supply of 1.3 months. There are currently 25 finished vacant homes on the ground, which is a 1.2 month supply, down from 2.6 months in 2Q13.
Inventory of vacant developed lots (VDL), or finished lots, in the St. George market have increased 10% since last year and 1% from last quarter. Despite the slight increase in overall lot inventory, absorption (starts) has also increased, which has caused the supply to drop. Based on the current pace of absorption, there is a 42.8 month supply, down from 51.7 months recorded at this time last year, and down from 44.6 months last quarter. While the overall supply of lots is above healthy equilibrium levels, there are areas and specific projects in the market that continue to have a negative effect on this supply. There have been 2,054 new lots delivered to the market over the past year, while builders have absorbed 1,549, resulting in a net increase of 505 lots. Vacant developed lot inventory in Mesquite decreased -8% from last year. At the current pace of absorption, this calculates to a 90 month supply, which is down from 145.3 months recorded in 2Q13.
While we do not expect the St. George market to expand at the same pace as 2013, the momentum is expected to continue into the rest of 2014.
Learn more about markets featured in this article: St. George, UT.