First-time and move-up buyers are both active in the new-home segment in Raleigh, North Carolina, with the former no longer wanting to pay rent and the latter driven by life changes.
Divorce, marriage, new higher-paying jobs, and unsuitable existing homes are some of the factors behind buyers' moves. To-be built homes are equally as popular in the market as specs in some communities. Extended rate locks help, in addition to a near full reversion back to pre-pandemic cycle times.
Builders are finding mortgage rate buydowns in the fives go a long way with consumers, and select communities are capping sales again to prevent gapping out. There is a voracious appetite for land in Raleigh and across the United States, and development costs continue to rise.
The market offers nearly 20% more high-income jobs compared with pre-pandemic. It is a top five U.S. market for growth of the 55 and older population since 2010, in part due to attainable housing, desirable weather, and desire to be near family (Raleigh is a top market for millennial population growth, too).
Construction and design regulations make it difficult to build affordable townhomes. Growing pains from strong population growth are causing an increase in traffic congestion; one of the toughest commutes is the 1-40 corridor in and out of fast-growing Johnston County.
Quarterly Housing Starts decreased 32.4% from a year ago, while the number of available vacant developed lots sits at 12,992 up 3.5% over the same quarter last year. In terms of supply/demand balance, the market area is 0.65% oversupplied.
New-home sales in the Raleigh-Cary metropolitan area decreased 2% year over year to an annualized rate of 8,623 units in June. Existing-home closings for the 12-month period ending in June posted a year-over-year decline of 35.5% to an annualized rate of 20,478 units.
The average list price for a new detached home in the region decreased 5.3% from 2022 to $453,461 in June while the average list price for a new attached home decreased 12.0% over the same period to $374,349. Homes priced over $550,000 experienced the most closing activity over the past year. The new-home affordability ratio for a detached home reached 31.4% in June.
TotaI nonfarm employment in the Raleigh-Cory metropolitan statistical area increased 3.4% from the same period last year to 721,800 payrolls in May 2023. There were approximately 2,800 more jobs in May compared with the previous month. The local unemployment rate decreased to 3% in May compared with 3.1% in the previous month. May's jobless rate as remained flat as it was this time last year when it stood at 3%. Zonda forecasts the region's unemployment rate will finish the year at 3.1%.
The current population for the metropolitan area is approximately 1,537,320 people. Population in the area is projected to increase by 2.2% in 2023. There are approximately 601,510 households in the region, which is up 2.4% year over year. Forecasts show that current household formation is expected to increase by an annual growth rate of 7.2% for 2028. Incomes increased by 4.8% from the previous year to $91,641.
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