Improving Economy and Low Resale Supply Helping Builders
(Phoenix, AZ – April 24, 2012) A fast recovering resale home market is starting to help the homebuilding industry, according to Metrostudy, a national housing data and consulting firm that maintains the most extensive primary database on residential construction in the US housing market.
New home starts in the Phoenix area numbered 7,409 during the year ending 1Q12, which represents a 24% increase over last year. Starts are based on Metrostudy’s lot-by-lot survey of all new construction subdivisions in Maricopa and Pinal Counties. “Supply on the resale side is very tight, yet there is demand for housing as the economy is picking up,” said Ben Sage, director of Metrostudy’s Phoenix division. “Builders are reporting increased sales traffic through their models and strong sales, and they are starting to raise prices in many of their communities.”
New-home supply is also down, which indicates that builders are constructing homes only to meet current demand rather than building on spec. Total new home inventory (single family), which includes all homes that have been started but are yet to exhibit any evidence of occupancy, fell to only 4,449 units at the end of 1Q12. The number of new inventory units that are finished but empty, many of which are sold, fell 26% from this time last year and now number only 1,740 units, which is the low point for this housing cycle. This represents a 2.9-month supply, “which is manageable,” said Sage. “The relatively low count of new homes in inventory is critical to an eventual recovery. It illustrates that the problem is not with new-home supply as much as with demand. With buyers starting to return, builders are having to start more homes because they cannot satisfy the demand from their current inventory.”
