GREATER SALT LAKE HOUSING 2Q17: Signs of Strength Continue even as Rising Home Prices Put Pressure on Buyers
- Through 2Q17, Annual New Home Starts are up 17% over 2Q16 levels, and quarterly starts are up 20% YoY.
- Affordability pressures continue to shape the market, with only 40% of new starts priced under $300k, and 55% of those for attached product.
- The median price of a new Single Family home is $360,100, up 4% YoY. The median price for a new Attached unit is $238,800, up 7% YoY.
Metrostudy’s 2Q17 lot-by-lot survey of the Greater Salt Lake housing market shows that demand remains at very high levels, however new home starts (for attached and detached product) are still 47% below the peak in 2006, when the market peaked at 17,608. As of June 2017, annual new home starts reached 11,365, which are up 17% over this time last year. Year to date starts have increased 14% above the first half of 2016, and show little signs of slowing down much at all. During 2Q17, new home starts totaled 3,031, which is a 20% increase over 2Q16. New home closings during the second quarter totaled 2,675, a 13% increase over 2Q16. Annual closings have increased 11% compared to this time last year for a total of 10,259, and year to date, closings are up 10% compared to the first half of 2016. Annual starts for Single Family detached homes increased 10% compared to last year’s pace for a total of 8,008. Annual closings are up 12% to 7,506. Annual starts for Attached (for sale) homes totaled 3,357, a 40% increase, and closings rose 9%, for a total of 2,753.
“The first half of 2017 has proven to be one of the strongest since the recession, with few signs suggesting that it will slow down this year,” said Eric Allen, Regional Director of Metrostudy’s Utah / Idaho offices. “Housing affordability continues to be a major concern in the Greater Salt Lake market for industry professionals and prospective buyers. Rising home prices will continue to put pressure on buyers, particularly those in the entry-level segment, and as such Metrostudy expects to see a larger increase in attached housing, smaller single-family lots, and possibly a decrease in overall square footage for homes.”
Annual starts for homes under $300,000 totaled 4,444, which represent only 40% of total market share, and 55% of this production is for attached product. Increasing land and labor costs are two of the main reasons for the rapid increase in home prices. As such, home buyers are feeling the pinch and therefore continue to get pushed into attached housing, both for sale and for rent. The median price for a new Single Family home is $360,100, 4% higher than last year and 1% above last quarter. The median price for a new Attached unit is $238,800 which is a 7% increase from last year, and up 1% from last quarter.
Total supply of new home inventory in the Greater Salt Lake market currently sits at 8.1 months, which is up from 7.9 recorded last quarter, and 7.5 months at this time last year. Total new home inventory is up 19% compared to last year for a total of 6,893. New home inventory for Single Family Detached homes currently sits at 4,527, which has increased 13% over 2Q16, and 6% above last quarter. Based on the current pace of absorption this is a 7.2-month supply, which is unchanged from last year at this time and up from 7.0 months recorded last quarter. Under construction inventory has increased 15% and is a 6.0 month supply. Total finished vacant inventory decreased 4% from last year, however increased 8% from last quarter for a total of 522. Under construction inventory for townhome units has increased 37% from a year ago to 1,601, a 7.9 month supply, up from 6.6 months in 2Q16. Finished vacant inventory has decreased -19% from last year to 170, however up from 141 units recorded last quarter. The current supply for finished vacant townhomes is .8 months, down from 1.2 months in 2Q16. Under construction inventory for Condo’s increased 94% from last year to 385, a 13.9- month supply, and finished vacant inventory increased 11% to 138, which is a 5.0-month supply.
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