Significant movement toward the top of our annual new-home market list doesn’t come about often. Two Texas powerhouse markets—Dallas-Fort Worth-Arlington and Houston-The Woodlands-Sugar Land—again claimed the top spots.
Dallas moved past Houston into the No. 1 position in 2017 and hasn’t budged since. In 2022, Dallas reported 8,838 more closings than Houston.
“The top 10 markets in the country have two main things in common: land availability and migration,” says Ali Wolf, chief economist at Zonda. “Land availability is a critically important metric here because it ultimately drives total sales. For example, nine of the 10 top markets for the most sales are also within the top 10 for total starts.”
Compared with last year, there was just one market that fell out of the top 10—Orlando-Kissimmee-Sanford, Florida—thanks to the Washington, D.C., area market sliding into the 10th spot.
Florida Rules
It’s hard to not notice the number of Florida markets on the list—10 of the state’s metro areas made the cut, with Tampa-St. Petersburg-Clearwater landing at No. 7.
“Tampa is becoming the next Austin—I’ve been saying that for several years,” asserts Kristine Smale, senior vice president for Zonda Advisory. “Not only is there growth in the tech industry, but it’s also becoming a financial hot spot and is attracting international attention—it was one of the World’s Greatest Places chosen by Time magazine this year.”
When asked what makes the Sunshine State attractive to new-home builders and buyers, Smale names three things: land; affordability; and quality of life.
“Florida is a rapidly growing state, and it’s not only the large metro areas that are growing, it’s also the smaller metro areas: Cape Coral/Fort Myers, St. Lucie, Sarasota, etc.,” Smale says. “What we are really starting to see is intrastate migration.”
As Wolf states earlier, the markets on this list have land, which is vital. Smale says none of the Florida markets on the list are a surprise, adding that performance of the Miami-Fort Lauderdale-Pompano Beach market would be stronger if it had more available land to meet the demand.
Palm Bay-Melbourne-Titusville is one of the three newcomers to the list this year, which Smale says is an affordability play. Wolf agrees that’s also the case for the other two markets, California’s Stockton and San Diego-Chula Vista-Carlsbad.
“Stockton, Palm Bay, and San Diego all offer relative affordability for those relocating,” Wolf says. “It seems almost comical to describe San Diego as an affordable alternative, but those migrating are often coming from even more expensive markets.”
Future Thoughts
Smale predicts another Florida market—Naples—might soon find itself within the list’s ranks.
In Naples, there are “future developments that will come online in the eastern area of the county that will meet the strong demand and could significantly increase the new-home closing numbers,” she says.
Smale also anticipates upward movement from Florida’s North Port-Sarasota-Bradenton market, ranked No. 20, thanks to a strong employment base and the fact that it’s home to two of the top-selling master-planned communities in the U.S.—Lakewood Ranch and Wellen Park.
In some of the Midwest housing markets, Wolf says resilience is being seen.
“Individuals in places like Indianapolis, Detroit, and Minneapolis often place a high value on homeownership, contributing to the relative strength in sales,” says Wolf. “The lower base prices and better availability of land compared to many other markets have also contributed to the sales success.”
Following a strong start to 2023, it will be interesting to see how new-home markets across the U.S. will fare going forward.
Download a PDF of the full 2023 Local Leaders list here.
