The average demand for new homes and new building lots in July across Metrostudy’s 35 markets stayed relatively the same month-over-month. New home demand decreased from 6.57 to 6.54 in July, while new lot demand increased from 7.08 to. 7.11. Weak markets like the Rio Grande Valley, and Albuquerque continue to pull down the average for both metrics, while strong markets in Texas (Houston, Dallas-Fort Worth, Austin), California (Naples-Fort Myers, Sarasota-Bradenton), Southern California, and Denver-Colorado Springs carry the brunt of the load.
Although the index showed no significant improvement overall, regional directors report a significant increase in the pace of starts both quarterly and annually in multiple markets, suggesting that builders have high expectations for the next season. New Residential Construction Starts data released by the Census Bureau in late August support Metrostudy’s findings, although the Census’ initial estimates reported an alarming decline in the South that Metrostudy data countered (Q2 starts in the Charlotte market were up 23% over Q1, for example).
Annual growth is most promising (and rapid) in markets that have been weaker in past years like Reno (45% increase), St. George-Mesquite (33% increase), and Chicago (30% increase). Quarterly pace also increased in the Atlanta (29% increase) and Naples-Ft. Myers (16% increase) markets, although the Boise market experienced a significant 20% decrease in starts quarter-over-quarter. While the Denver-Colorado Springs market has been stable, it’s exciting to see that the pace of starts in that market is beginning to return to “normal”—second quarter starts were the highest of any quarter since the third quarter of 2007.
Builders may have good reason to be optimistic for the future, given that regional directors have reported stable traffic in the majority of markets the past three months. Supply is there and buyer interest is there—now potential buyers just need to be lured to the sale.