Posted in Phoenix - Tucson Market | Posted on 07-18-2013 | Written by Metrostudy News
(Phoenix, AZ – July 18, 2013) The Phoenix homebuilding market is improving and will continue to improve, but many in the industry expected more activity 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.
Like the nation, the Phoenix economy is expanding at a consistent if not spectacular pace. Employment is up 2.6 % from June to June, or plus 44,200 jobs during that time. “This ranks Phoenix in the top 10 among all metro areas in terms of year-over-year growth, but we have recovered only 45 % of the jobs that were lost to the recession,” said Ben Sage, Regional director of Metrostudy’s Phoenix – Tucson Market. Unemployment as of June stands at 7.2% (not seasonally adjusted). This is down modestly from 7.6 % one year ago, but the labor force has grown since last year. More people entering the workforce is a positive sign.
According to the Metrostudy quarterly survey, annual home starts, attached and detached, in the Phoenix area numbered 11,773 ending 2Q13. This is up 35 % from a year ago, but the pace of improvement has slowed since starts increased 67 % during the calendar year 2012. Starts in 2Q13 alone numbered 3,225, which is up 4 % from 2Q12. “Builders are reporting an average of less than 4 sales per month year-to-date, which is right in line with last year on a persubdivision basis. For the most part, though, builders had higher expectations heading into 2013,”said Sage. Annual new home closings, or “move-ins” by Metrostudy methodology, were up as builders closed 11,246 units during the year ending 2Q13. This represents an increase of 30 % from one year ago, which is in line with the increase in starts.
The overall inventory of vacant developed lots (VDL), or finished lots, declined 11 % over the past year to 53,060. This is for all product types, including attached product as well as custom lots. The decline combined with an increase in starts has allowed supply of VDL to fall to 54 months. This is well above equilibrium range of 24 months, but it is down from 135 months two years ago. “This illustrates how quickly supply measures can drop when lot absorption increases. It is important to note that supply varies significantly by geography and product type,” said Sage. For example, lot shortages exist in Chandler, Gilbert, Peoria, and Surprise. Metrostudy has the only field-verified count of vacant developed lots, commonly referred to as finished lots.
Regarding new-home inventory, the number of finished vacant units totals 1,891, which is largely unchanged over the past four quarters. With closings on the rise, however, the relative supply of finished vacant units is down to 2.0 months, which is within equilibrium range. “There is evidence that builders constructed a few spec homes earlier in the year, but demand has been strong enough to keep builder inventory well under control,” said Sage.
“Metrostudy had forecast an increase in starts of 25 % in 2013, or about 14,000 units. With first-half starts up only 13 percent and the spring selling season behind us, it does not appear Phoenix will reach that level. Even so, our forecast will be one of the most accurate as most were expecting even larger increases. Sales to investors was part of last year’s surge, but builder price increases helped stem that tide. Now we are back to true demand, which is still well up from two years ago,” said Sage.
For information contact:
ben sage @ 480.756.9300
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.
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