March, April, and May are the months builders reap the rewards of their hard work during the entire year. Since the start of our BUILDER-Metrostudy Demand Index in September 2014, the average score for new-home demand has been on the rise, and consistently ramps up during spring selling season. The trend continued in our latest collection from Metrostudy regional directors in 36 major housing markets, with the average demand for new homes reaching 7.63 on our 10-point scale—a 5.6% increase year over year, and a 13.6% increase from May 2014.
Despite a slight -1.16% dip from April, when the average score was 7.72, regional directors report that spring selling season is coming up roses in the majority of markets, even underdog markets like Albuquerque, N.M., which have been sluggish to recover from the recession. While regional director John Covert reports that many potential buyers are staying put until the economy improves, “those that can move are able to take advantage of low rates in an undervalued home market.”
Employment reports boasting low unemployment rates and a slowly strengthening economy (unemployment reached a 16-year low of 4.3% in the latest jobs report from BLS) continue to buoy the recovery in many markets lower on the scale, like Chicago, Indianapolis, Twin Cities, and Philadelphia.
In Denver-Colorado Springs, Southern California, Salt Lake City, and South Florida, where regional directors consistently report home demand on the high end of the scale, spring selling season is performing well. In fact, the season started early in Denver, largely due to warmer weather. Southern California regional director John Mulville says many builders there are reporting a stronger season compared with the past few years, and, in some cases, 2017 sales are double that of 2016. The future impediments these high-demand markets face remain the same, however: rising home prices translate to higher land prices, and buyers who need affordable product are quickly priced out.
