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New Home Activity has a Decidedly Southern Drawl

by devteam June 2nd, 2015 | Share

The old adage might be “go West” but new home buyers aren’t listening.  A recent analysis by CoreLogic shows that thernstrongest new home sales markets are overwhelmingly in the South, especiallyrnTexas and North and South Carolina.  </p

New home sales increased nationally in the 12 months ended in January by 3rnpercent but rose by as much as 17 percent in some fast growing southernrnmetropolitan areas.  The region claimed eightrnout of 10 of the markets where the sales increase was the greatest compared to thernsame period a year earlier, led by Nashville the 17 percent gainer.  One of the two big increases outside of thernSouth was in San Jose (the other was Portland, Oregon, in eighth place) wherernnew home sales rose 14 percent.</p

Atlanta had the third greatest increase at 10 percent, which CoreLogic callsrnparticularly remarkable as the area is only now recovering from its prolongedrnbout with foreclosures.  Distressed salesrnstill constituted 16 percent of its total market during the period.  Jacksonville, Florida also saw increased newrnhome sales of around 10 percent.  Thernother southern metro areas in the top ten were Greenville, South Carolina; Sarasota-Bradenton;rnFort Worth-Arlington; San Antonio, and Miami.</p

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CoreLogic also looked at those markets where new home sales made up thernlargest portion of all sales and again these were predominantly in the Southrnincluding all but one of the top ten.  Thernmarket with the highest new home sales share was El Paso, where 22 percent ofrnall sales were new construction, compared with only 8 percent nationally.  The author of the article regarding thesernsales, Sam Khater says that this is not atypical of El Paso where the overallrnhousing market has been stable and the portion of new home sales has been asrnwell, averaging 22 to 24 percent over the previous 15 years.</p

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In Raleigh 21 percent of sales were of new homes, followed by Charleston, SouthrnCarolina at 20 percent.  Khater says thatrnCharleston is also one of the five cities he identified out of the top 50 thatrnhas more new sales than it did in the early 2000s.  Prices for new homes however have beenrnincreasing rapidly, up $60,000 in two years, a greater appreciation than overrnthe previous 12 years, which may impact sales in the future.rn</p

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Three Texas cities, Houston, San Antonio, and Austin took positions fourrnthrough six, each with a slightly smaller than 20 percent new home salesrnshare.  Rounding out the top ten were Charlotte,rnJacksonville, Colorado Springs, and Orlando. rnNew homes sales in each topped 15 percent of the market.</p

The 441,000 new homes sold over the 12 month period were still well belowrnthe 660,000 average for new home sales over the last 50 years.  CoreLogic says however that in many of thernremaining metros with solid job growth, the reality of very low inventory ofrnunsold new homes, declining vacancies and rapid price appreciation will lead tornmore construction in the next few years that will lift many more markets aboverntheir current new home sales trajectory.

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About the Author

devteam

Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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