Portland, Oregon, and San Jose, California, are the only major U.S. markets significantly underperforming on the new Zonda Market Ranking, which accounts for new-home sales pace and volume and is taken as a percentage relative to a baseline market average.
Resales, hampered by low supply, are not looking rosy either. In its 2024 Housing Forecast, Realtor.com expects Portland to see a 7.4% year-over-year decrease in median existing-home price and a 25.6% decrease in existing-home sales, ranking it last among the 100 largest metros.
Starts and new-home inventory are on the rise, but it remains to be seen how much will be absorbed given current conditions.
Strengths
Annual starts have jumped to their highest level since 2022. Annual new-home closings have experienced their first increase since 2021. The number of active detached projects is higher year over year, giving buyers some more options.
Weaknesses
Year-over-year job growth is slowing. After reaching the equilibrium point of 24 months in 2023, months of supply of vacant developed lots has fallen again to just slightly above half of that point, which suggests lot prices will likely remain elevated and expensive.
Sales
New-home sales in the Portland-Vancouver-Hillsboro metropolitan area increased 16.7% year over year to an annualized rate of 3,864 units in February. Existing-home closings for the 12 months ending in January posted a year-over-year decline of 27.1% to an annualized rate of 27,426 units.
Prices
The average list price for a new detached home in the region decreased 1.6% from 2023 to $659,261 in March, while the average list price for a new attached home decreased 34.7% over the same period to $455,449—homes priced between $450,000 and $550,000 experienced the most closing activity over the past year. The new-home affordability ratio for a detached home reached 27.6% in January.
Economy
Total nonfarm employment in the metropolitan statistical area increased 1.4% from last year to 1,261,400 payrolls in December with approximately 3,200 more jobs compared with November. The local unemployment rate increased to 3.6% in December compared with 3.5% in the previous month. December’s jobless rate is lower than it was during the same month in 2022 when it stood at 4.4%. Zonda forecasts the region’s unemployment rate will finish the year at 3.9%.
Community
The area’s population is approximately 2,509,820 and is projected to increase by 0.4% this year. Approximately 1,022,150 households are in the region, up 1.1% year over year. Forecasts show that current household formation is expected to increase by an annual growth rate of 1.3% for 2028. Incomes increased by 3.7% from the previous year to $97,934.
