New home sales in Metro Phoenix rose by 15 percent over last year, with twenty-five months of consecutive YOY growth but Leveling-Off Expected.
By Callan Smith | Rose Law Group Reporter
Housing demand increased at its slowest pace during the 30-day period preceding mid-September. It did increase, though, YOY, for the 25th consecutive month. Data has not yet been released thru mid-October, but initial analysis suggests the streak has likely been blown, Jim Belfiore, founder and president of Belfiore Real Estate Consulting, said before a large group of homebuilders and industry insiders, at the Belfiore Metro Phoenix housing market update Thursday.
The sales per subdivision average is at 3.0 sales per month through mid-September, up from a year prior at 2.7 sales. The 2018 peak sales reached 3.5 sales from March through April 2018, with the total number of sales exceeding 1,950 units. Next week, Belfiore anticipates offering up data showing the number of sales per subdivision has leveled off over the last month.
New homebuyer traffic was down seven percent from mid-2017 through mid-2018, but “most buyers shopping now are looking for ready to purchase with conversions higher than during any period in the last decade,” Belfiore said.
New home prices have appreciated 3.3% in 2018 through July. April through June saw price gains of 0.6 percent monthly. Affordable product is still needed for first-time buyers, Belfiore said, as it is more challenging to bring in buyers at higher price points.
Subdivision counts are at 534 down five percent YOY. If the average sales rate continues, 313 sell-outs could occur in the next 12 months.
Top subdivisions for the valley are Santa Rosa Springs by D.R. Horton, Cactus at Parkside by Pulte Homes, Saguaro & Agave at Watson Estates by D.R. Horton, Express at Tartesso by D.R. Horton and Harmony at Meridian by William Lyon Homes.
Top Builders based on sales per subdivision with a minimum of five active subdivisions, are KB Home, D.R. Horton, William Lyon Homes, Pulte Homes, K. Hovnanian Homes, Woodside Homes and Taylor Morrison.
Wickenburg, Sun City, I-17 and 101, Apache Junction and Eloy are the top performing submarkets in Metro Phoenix, though the data is a bit misleading with few active communities contributing to the increase. Queen Creek / Hunt Highway was the most solid-performing, larger-submarket over the last 2-months. The poorest performing submarkets are Sky Harbor North, Central Scottsdale, West Phoenix, Biltmore East and the 51 Corridor.
Permits are up 13 percent YOY through August at 16,073 with Belfiore projecting 23,500 for the year. A recent drop in permit activity reported by the Homebuilders Association of Central Arizona is no cause for concern; Belfiore said he believes the data was a one-month “blip” on the radar, suggesting that permits are likely to increase in coming months as builders prepare for spring.
Lot supplies continue to decrease with 38,209, total finished lots, down ten percent over last year, and 22 percent over two-years-ago.
“We should see the finished lot supply drop pretty dramatically over the next five years, as the plume of demand underway now. Sales are now taking place all over the Valley, with resale home prices having increased to the point of making new homebuilding feasible in market areas where construction previously made no sense due to a lack of profitability,” Belfiore said.
The largest percentages of finished lots are located in Coolidge and Florence, Casa Grande, Queen Creek Hunt Highway area and North Buckeye.
Existing homes are at 21,105 total listings with a 2.9-month supply that is continuing to be below normal the same as one year ago, down from 3.4 months two-years-ago. Existing home prices are down three percent over last quarter, to $260,000, but have risen six-percent YOY according to the Cromford Report.
Job growth numbers came in at 73,500 net new jobs over the last 12 months, through August, according to Moody’s Analytics.