11: New York-Newark-Jersey City, New York-New Jersey-Pennsylvania
Total new-home closings: 7,114
Population: 20,092,883
The good: Housing hot spots in Northern and Central
New Jersey.
The
bad: Signs of withdrawal, including
falling housing inventories, fewer homes under construction, and starts and
closings down for a rolling four quarters.
The bottom
line: By following niche
markets and capitalizing on 29.5 months of lot inventories, there’s plenty left
to spur competition among builders.
Builders aren’t traveling to Atlantic City to place their bets in Jersey; instead, they’re showing their hands in Central New Jersey, where starts have taken off in the first quarter of 2015 by a 32.5% increase over the fourth quarter of 2014. Northern New Jersey is another location to bet on, where a niche market among those aged 55 and over is producing 30% of total home sales. Those hot spots aside, the region shows signs of withdrawal. Compared with the fourth quarter of 2014, total housing inventories in this year’s first quarter dropped by 5%, representing a 10.8% decrease year over year, as the number of under-construction units fell by 2.7%, a 12.4% decrease year over year. Meanwhile, finished vacancies decreased by 7.4% over the same period. With the first quarter of 2015 delivering a 61.1% year-over-year increase in lots delivered, starts in mid-2015 may serve as indicators for where this region is heading.
See complete New York market data >
12: Los Angeles-Long Beach-Anaheim, California
Total new-home closings: 6,906
Population: 13,262,220
The good: The average sales price among new homes has risen from
$537,901 in February 2013 to $708,852 in February 2015.
The bad: Resale properties stole 12% of the total market over a
two-year period, as less than 30% of buyers can afford new homes.
The bottom line: With an 11.1-month vacant developed lots
inventory and peak sales occurring at the $1M mark and above, there’s money to
be made in this market.
As prices rise beyond the reach of nearly one-third of the area’s population, the new-home market surrounding Los Angeles continues to cool in 2015. Year-to-date permit figures dropped in March 2015 year over year by 12%, as the resale market squashed new sales over a 12-month period ending in February, expanding from 68% to 80% of market share. With the number of vacant developed lots in Los Angeles County rising to a monthly supply of 11.1 months, the issue isn’t in finding lots on which to build so much as it’s finding qualified buyers. From the fourth quarter of 2014 to the first quarter of 2015, closings decreased by 11%, but starts prove that builders aren’t giving up—they increased by a whopping 36% over the same period. Based on sales statistics, the greatest success should come from prices of around $425,000 and over $1M.
See complete Los Angeles market data >
13: Seattle-Tacoma-Bellevue, Washington
Total new-home closings: 6,234
Population: 3,671,478
The good: Rising average home sizes and prices per
square foot push average sales prices over the $400,000 mark.
The bad: Changes in mortgage requirements helped remove
entry-level buyers from the new-home market.
The bottom
line: What changes among
mortgages have taken away, a new class of buyers has filled in, proving this
market can respond to new challenges.
Changes in mortgage requirements in the first quarter of 2014 shifted entry-level home buyers out of the new-home market and into resale homes. The market responded with a downward shift, dropping 17.3% year over year for both single-family and attached residences in the third quarter of 2014. Builders adjusted, filling in new-home sales with move-up buyers and baby boomers, and pushing the average size of new homes from 2,380 square feet to 2,540 square feet year over year, from third quarter 2013 to third quarter 2014, along with per-square-foot prices, which jumped a whopping 47.9% in the same period. Together, they drove the median sales price for new homes from $370,200 to $422,400. All in all, this market’s proved it can shift gears without giving up momentum.
See complete Seattle market data >
14: Raleigh, North Carolina
Total new-home closings: 6,111
Population: 1,242,974
The good: After signs of normalization, the market
marches on with a new focus on the $350,000 price range.
The bad: Buyers in the $200,000 price range are
forced out of the new-home market, contracting their share by 20% in February
2015.
The bottom
line: With renewed focus,
the early 2015 market proves Raleigh has plenty of demand left to give, by
looking to the right buyers.
Early in 2014, Raleigh showed continued recovery, but signs of market normalization. As of fourth quarter 2014, those indicators bore out as year-over-year decreases in new-home starts, registering their first drop since 2010 at 2.2%. The number of vacant developed lots also decreased by 1,100 from fourth quarter 2013 levels. But come February 2015, as home buyers in the $200,000 range were squeezed out of the new-home market—contracting their share by 20%—starts in the $350,000 range hit 2007 levels. At the same time, foreclosures and REOs retreated, representing 17.8% of existing home closings in February 2015, down from 28.9% a year earlier. Those shifts may be the culprit behind a 4.5% year-over-year increase in closings registering February 2015, marking quite a turnaround from a 9.1% drop in January.
See complete Raleigh market data >
15: Denver-Aurora-Lakewood, Colorado
Total new-home closings: 5,970
Population: 2,754,258
The good: As the market exits an adjustment period,
closings flatten but hold steady.
The bad: With the sweet spot in sales shifting upward
to $300,000, spec homes will require larger investments.
The bottom
line: Adjusting to new-home
prices that averaged $334,762 in February 2015 allows builders to keep on
keeping on.
The Denver market has undergone dynamic changes over the past couple of years, exiting an adjustment period but holding strong. A growing economy kept this market moving in 2014, but Metrostudy reports forecasted a slight decline over the course of that year, due to price increases. At that time, lots available for building homes under $200,000 had disappeared from the market, while those aimed at the $200,000 to $250,000 range were fading fast. The predicted trajectory proved true, as new-home prices rose year over year in February for two consecutive years, from $281,923 in 2013 to $334,762 in 2015, expanding the sweet spot to include not only the $200,000 to $250,000 range, but also $250,000 to $300,000. In March 2015, year-to-date permits remained flat over 2014.
See complete Denver market data >
16: Las Vegas-Henderson-Paradise, Nevada
Total new-home closings: 5,680
Population: 2,069,681
The good: Those with boots on the ground are betting
hard, placing a 45% increase in starts on the table in the first quarter of 2015.
The bad: With lot inventories at all time lows,
this town’s continued success may lie in the hands of developers who can find
land.
The bottom
line: With prices rising,
closings up in the first quarter of 2015, and just 1.7 months of inventory
among single-family homes, everyone’s betting on Vegas.
Vegas hit the jackpot with builders in first-quarter 2015, with new home starts up 45% year over year—at their highest level since 2007—contributing to a 7% year-over-year gain in annual starts. With closings down by 14% year over year (though up by 5% quarterly) those increased starts may be a show of confidence among builders in this market’s immediate future A key issue is lot supply, which remains historically low and may well be to blame for median prices among single-family product rising by 7.4% year over year in the first quarter of 2015. Median “offer to build” prices among detached single-family units also climbed to $304,000 in the first quarter of 2015, 7.4% higher than just a year prior. Metrostudy reports suggest that the key to this market’s continued performance may lie in the hands of developers.
See complete Las Vegas market data >
17: Tampa-St. Petersburg-Clearwater, Florida
Total new-home closings: 5,526
Population: 2,915,582
The good: Jobs, jobs, jobs—to the tune of a 99% peak
recovery in employment levels as of May 2015.
The bad: If you’re just getting started then you’re
already behind, with starts jumping 24.5% year over year in the first quarter of
2015.
The bottom
line: With total single-family
inventory at a 7.9-month supply in the first quarter of 2015, there’s plenty of
room to join in.
With new-home starts down 4.5% year over year and the annual starts rate down by 10.3% in the fourth quarter of 2014, Metrostudy reports suggested that 2015’s performance would depend on job creation. With 18,000 additional jobs added, a 1.1% drop in unemployment over 12 months, lower fuel prices, and growth among wages, by March 2015 builders’ wishes were more than granted. And in the first quarter of 2015 they responded with a 24.5% increase in starts over first quarter 2014 levels. In the first quarter of 2015, total single-family inventory rose by 13.2% year over year, reaching a 7.9-month supply. The hot spots include the counties of Hillsborough and Pasco, which together accounted for 87.5% of all annual starts activity. If your game is Follow the Leader, it’s go time in Tampa.
See complete Tampa market data >
18: Riverside-San Bernardino-Ontario, California
Total new-home closings: 5,389
Population: 4,441,890
The good: A stable environment that’s ensured by job
growth and consumer confidence.
The bad: Less than 30% of home buyers are able to
afford new homes.
The bottom
line: This market may not be
exploding, but it’s geared up for steady performance.
Since 2011, builders enjoy a safe market environment in usually volatile Riverside, via annual starts and closings that fall closely in line with one another year after year. As consistent job growth, lower unemployment, and growing consumer confidence registered in the first quarter of 2015, annual starts rose by 23.1% year over year and by 6.8% over the fourth quarter of 2014. That isn’t to say the region is without its challenges. With median prices among resale properties clocking in at $135,000 less than median new home prices, 30% of buyers are lured out of new construction. But that hasn’t stopped annual closings among new homes from trudging upward by 5.5% in first quarter 2015 over first quarter 2014, as 65% of the quarter’s starts fall in line with able buyers from $300,000 to $500,000.
See complete Riverside market data >
19: Nashville-Davidson-Murfreesboro-Franklin, Tennessee
Total new-home closings: 5,296
Population: 1,792,649
The good: A big entry into 2015 among starts and closings show upward
momentum.
The bad: Lot shortages may be to blame for downward patterns after
every market upbeat.
The bottom line: The market has proved, amid its
fluctuations in recent years, that its general direction is upward.
The single-family new-home market has made considerable tempo changes in Music City over the past few years, but so far finds an upbeat after every down tempo. Closings made a strong statement going into 2015, with a nearly 20% boost year over year in January, followed by an 11.8% increase in February. Based on the market’s patterns over the past three years, you might expect this to be followed by a temporary downturn, but in March, year-to-date permit totals for single-family dwellings were up by 13% year over year, indicating that things may be different this time around.
Changes in Nashville’s momentum may be attributed to a short supply of lots in the region. And with the total number of homes built absorbing the same number of finished lots at the end 2014, more fluctuations may be in store. But so long as the tempo returns after each slowdown, builders will keep dancing in Nashville.
See complete Nashville market data >
20: Jacksonville, Florida
Total new-home closings: 5,104
Population: 1,792,649
The good: Following indications of worsening in January and February
2015, permits in March show signs of increase.
The bad: Starts were down year over year in January and February—by
49% and 25.7%, respectively.
The bottom line: With Metrostudy predictions calling for a
slow pickup and with permits rising by 5% year over year in March, this market
isn’t done.
With closings up and starts down coming out of 2014 and into 2015, indications in Jacksonville pointed to a worsening market. While the annual starts rate for single-family homes was down year over year in February 2015 by just 1.1%, year-over-year monthly figures paint a different picture, showing a 49% drop over the previous year. A month prior, January posted a 25.7% year-over-year decrease. These changes coincide with an 18.2% drop in under-construction housing figures, year over year in February, and follow a decrease of 11.3% year over year in single-family starts in the fourth quarter of 2014. Nevertheless, Metrostudy predictions call for a slow pickup in the construction market in the near term. And year-to-date single-family permits that are up by 5% year over year in March seemingly back that notion.
See complete Jacksonville market data >
Don’t forget to also check out BUILDER’S 2015 Local Leaders
