(Indianapolis, IN – May 6, 2013) With continued gains in employment and expected declines in the unemployment rate, Metrostudy expects slow but steady growth in the housing market to continue through the remainder of this year. This is according to a recent report by Metrostudy, a national housing data and consulting firm that maintains the most extensive primary database on residential construction in the US housing market.
From the U.S. Census Bureau, In Indianapolis, the revised net new job number for 2012 is 16,700. Through the first few months of 2013, the annual rate of job generation stands at 13,000 net new jobs compared to one year ago. From 2010 to 2012 the unemployment rate showed steady declines, from a high of nearly 10% to a September, 2012 rate of 7.1%. Since the end of September, however, the unemployment rate has risen to a current level of 8.5%. With a current net increase in jobs of approximately 13,000, it is expected that the unemployment rate will resume a downward trend. “Without positive trends in the local economy and, more importantly, the job numbers, it would be difficult to forecast continued growth in new home construction,” said Chris Huecksteadt, Regional Director of Metrostudy’s Indianapolis and Chicago Markets.
In the Indianapolis region, there were a total of 3,988 new units started in the twelve month period ending with the first quarter of 2013, an increase of 8.5% compared to the previous quarter. The 974 units started in the first quarter of this year represents an increase of 47.4% over the 1Q12 starts total. The annual rate of closings also rose in the first quarter. There were 3,864 closings during the twelve month period ending with the first quarter of 2013. This represents a 6.2% increase in the number of annual closings compared to the prior quarter. The first quarter number of 850 closings is up 36.2% compared to the 1Q12 total of 624 closings. “The market is at such a level, that nearly any increase in the rate of new home starts or closings will seem impressive percentage-wise. That being said, following several years of market declines, the uptick in new home construction is certainly a welcome sign,” said Huecksteadt.
“Finished and vacant inventory has steadily fallen in the overall market, leading to the need for new home construction as demand begins to increase,” said Huecksteadt. The supply of finished and vacant inventory fell to 1.8 months overall, the lowest level of supply since the start of the downturn in the housing market. Levels of new home supply are low in nearly all of the counties that make up the Indianapolis market.
With the consistent pace of new home construction and a declining level of vacant developed lot inventory, the months of supply for lots in Indianapolis has fallen from a high of nearly 80 months in the second quarter of 2009, to a current level of just 41.5 months. This indicator is still above the equilibrium range of 24 to 30 months, but the trend continues to move in a positive direction. New lot development has begun to occur at levels not seen for several years. “There were a total of 561 new lots delivered in the first quarter of this year (2,895 in calendar year 2012). Lot deliveries in 2012 were the most in a year since 2006. Of course the location and pricing of some of the existing lot inventory will limit those lot’s ability to be absorbed moving forward,” said Huecksteadt.
“Given these factors, Metrostudy expects from 4,600 to 4,800 new home starts in 2013. Growth is expected to continue through 2014, with another 20% to 25% bump in new home construction expected. Of course, this forecast is heavily dependent upon continued positive news on the jobs front,” said Huecksteadt.
For information contact:
chris huecksteadt @ 847.241.6570
Metrostudy, a Hanley Wood company, is the leading provider of primary and secondary market information to the housing and related industries nationwide. Established in 1975 in Houston, Metrostudy provides research, data, analytics and consulting services that help builders, developers, lenders, suppliers, retailers, utilities and others make investment and business decisions every day. www.metrostudy.com
About Hanley Wood
Hanley Wood, LLC is the premier media, event, information and strategic marketing services company serving the residential, commercial design and construction industries. Through its operating platforms, the company produces award-winning digital and print publications, Newsletters, websites, marquee trade shows and events, Market Intelligence data and strategic marketing solutions. The company also is North America’s leading publisher of home plans.