New-home sales in Fresno, California, showed improvement in the first quarter, with the metro's new-home pending sales index at the end of the quarter seeing its first year-over-year increase since March 2022.
Fresno's annualized average sales rate also improved to its highest rate since March 2022 and was outpacing both California and the U.S. at the end of the first quarter. The average number of quick move-in homes per project has decreased since October's high and held steady throughout spring.
Fresno's unemployment rate has ticked higher month over month and year over year, but the metro's year-over-year rate of job growth remains solid and has outperformed the state and the nation since October.
Strengths
Under construction inventory has decreased since the 10-year high seen in the first quarter of 2022. The market cooldown and pullback in starts have allowed vacant developed lot inventory to loosen slightly over the last several quarters. Fresno is one of the least expensive places to build new homes in the state.
Weaknesses
Fresno has few high-tech jobs, and information is its second smallest employment sector. Overvaluation is forecast to remain sticky through 2025. Annual starts continue to largely outweigh annual lot deliveries in the more affordable $350,000 to $400,000 price range.
Supply
Quarterly housing starts decreased 55.1% from a year ago, while the number of available vacant developed lots sits at 2,060, up 10.9% over the same quarter last year. In terms of supply/demand balance, the market area is 6.2% undersupplied.
Sales
New-home sales in the Fresno metropolitan area decreased 39.5% year over year to on annualized rate of 1,507 units in March. Existing-home closings for the 12-month period ending in April posted a year-over-year decline of 46.2% to an annualized rate of 7,117 units. Of those, most were attached units.
Prices
The average list price for a new detached home in the Fresno region increased 8% from 2022 to $531,723 in April, while the average list price for a new attached home decreased 8.2% over the same period to $372,535. Homes priced over $550,000 experienced the most closing activity over the past year. The new-home affordability ratio for a detached home reached 18.5% in March.
Economy
TotaI non-farm employment in the Fresno metropolitan statistical area increased 3.4% from the same period last year to 388,200 payrolls in March. There were approximately 100 more jobs in March compared with the previous month. The local unemployment rate increased to 7% in March compared with 6.6% in the previous month. March's jobless rate is higher than it was this time last year when it stood at 6%. Zonda forecasts the region's unemployment rate will finish the year at 8.1%.
Community
The population for the Fresno metro area is approximately 1,013,960 people. Population in the area is projected to increase by 0.5% in 2023. There are approximately 328,230 households in the region, which is up 0.1% year over year. Forecasts show that current household formation is expected to increase by an annual growth rate of 2% for 2027.
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