Third Quarter Housing Pullback Not a Cause for Concern

The pace of new home construction in South Florida slowed in the third quarter, with 1,813 housing starts, compared with 2,040 (the post-bubble peak) in the prior quarter. Although still considerably higher than a year ago, this level of home-building is 11.1% lower than that of the second quarter.

“This decline is not a cause for concern, and is not an inflection point. In fact, substantially all of the apparent decline is actually due to the prior quarter’s surge, driven by the 249 starts in the Aventura Isles development in the northern portion of Miami-Dade County,” said Brad Hunter Metrostudy’s Chief Economist.

Highlights by County:

Miami-Dade: The basic upward trajectory of homebuilding in Miami-Dade County is in place, but the path has been jagged when viewed quarter by quarter. There was a massive surge of construction in the second quarter of 2013, followed by a drop in the third quarter. “The third quarter number was still higher than the first quarter number; the intervening quarter was the anomaly,” Hunter said

Finished, vacant inventory has not yet reacted to the surge in construction, but there may well be a large uptick in this number in the fourth quarter and first quarter 2014 readings, depending upon how quickly the buyers of those homes get moved in. “The homes are sold, so they will be moved into in short order, meaning that a related increase in finished vacant inventory will be temporary,” Hunter said.

Annual move-ins in Miami-Dade rose 61% year over- year, and the second quarter’s 422 move-ins were up 7.7% versus the first quarter’s pace.

Broward: Housing starts in Broward County fell 12.4% in the third quarter to 298, from 340 in the second quarter. Still, the latest reading is up 21.1% from a year earlier.

There has been a marked shift within the county in the last six months, from the south to the north. This has happened as Monterra has built out in the south, and the large north-county communities in Parkland have started to ramp up. “The northwestern portion of Broward County is on its way to replacing southwest Broward as the greatest source of new home supply. Lennar and Standard Pacific, along with Toll Brothers and WCI, will lead this surge,” Hunter said.

The result of this shift is that Broward’s numbers at a high level look like they are flat or down. Additional new projects are being planned in the central portion of the county, but most of the rest is infill.

Palm Beach: Housing starts in Palm Beach County are generally staying close to 500 per quarter, having ticked up to 530 in the third quarter. The inventory of finished, vacant new homes rose to 229 in the third quarter, up 16.2% from the previous quarter and almost back up to year ago levels. The months-of-supply of finished housing is at 1.5 months, down from 1.8 months a year ago.  “Palm Beach County is a very tight market,” Hunter said.

Martin: Martin County is finally back to a normal level of housing supply, having shed most of the overhang from the boom and bust. Starts got back into the triple digits again, for the first time since the financial industry meltdown. There were 113 starts in the third quarter, up from 99 in the prior quarter, and up from 93 a year ago. Finished, vacant inventory stands at 64 units, or 2.8 months-of-supply.

St. Lucie: Construction activity has surged in the past six months in St. Lucie County. The quarterly pace of housing starts increased 44.1% sequentially, and is now 181.4% above the year-ago pace. The absolute numbers are small, of course, allowing for massive percentage changes. The actual number of homes started in the third quarter is 121, compared with only 43 a year ago. At least the trend is clearly upward. Finished, vacant inventory is still high in most areas of the county, at 8.6 months on average.

Indian River: Activity is fairly flat in Indian River County, in terms of starts, but the pace of move-ins is now extremely strong. Move-ins (what Hunter calls “observed closings”) rose 61.1% in the third quarter, from 66 in 2Q to 116 in 3Q. As a result, the months of supply of finished, vacant inventory fell from 4.5 months to only 2.8 months.

For information contact:
brad hunter @ 561.573.8351

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