New Construction Year-Over-Year Numbers
The first half of 2019 has been challenging for our industry, especially from a weather standpoint. First, we experienced heavy snow well through the first quarter, then were riddled with rain for most of the second quarter.
This type of disruption makes it more difficult to forecast and identify trend lines. However, some indicators are telling us change is needed. Let’s take a look at New Construction Year-Over-Year numbers. Inventory is up 4.9%. Days on market numbers are up 36% in May. The average sale price has decreased by $14,000. Closed sales are off 11.3%. Pending sales are off 13.3%.
Couple that with low 2.4% unemployment, low 3.875% rates, the amount of incentives being offered, and it’s clear that Supply clearly outweighs the current Demand.
It would be prudent for Builders to reduce their inventory levels by approximately 12% to re-establish balance. This adjustment would align supply with demand, as well as assist in stabilizing values. A balanced market is a sustainable market, and beneficial for both buyers and sellers.
How does the new construction market look as we near the mid-way point of 2019? May closed sales were up 8.7% from last month and down 19.3% from the same month 2018. May pended sales were down 2.9% from the previous month and down 8.9% from last year at this time.
There were 1,327 new construction homes for sale in May, which is up 2.7% from the previous month and up 4.9% from last year.
The average sale price of a new construction home in May was $325,000, which is down $14,000 from last year at this time. The average price per square foot for May was $183, which is down $8 from last year at this time.
The new construction market had 1,059 single-family homes for sale in the month of May, compared to 988 homes at this time last year. That’s an increase of 7.2% and works out to 6.7 months of inventory based on closed sales and 5.8 months of inventory based on pended sales.
For single-family homes, the average price in May was $342,000, which is down $17,000 from last year. The average price per square foot for the month of May was $191, compared to $193 per square foot last year at this time.
In the multi-family new construction market, 268 units were for sale in the month of May, compared to 277 homes in same month of 2018. That’s a decrease of 3.2% and works out to 5 months of inventory based on closed sales and 5.3 months of inventory based on pended sales.
The average sale price of a new construction multi-family unit was $257,000 in May, which is down $14,000 from last year in May. The average price per square foot for the month of May was $157, compared to $179 per square foot last year at this time.
The top new construction metro markets for single-family homes are: Ankeny, Waukee, West Des Moines, Norwalk, and Urbandale.
The top new construction metro markets for multi-family homes are: Ankeny, Waukee, Norwalk, West Des Moines and Johnston.
Will the single-family buyers dramatically decrease in mid-August as they normally do, or will they extend their buying activity into September or even October this year? Time can only tell, but rest assured, single-family buyers will be the weight that tilts the Year-Over-Year scales this year.
For more information on New Construction Market data, feel free to contact me!