ORLANDO HOUSING 2Q17: Strong Demand Drives Continued Growth; Sharp Increase in 3Q Closings Expected on Builder Backlog

  • 2Q17 Annual New Home Starts Up 14.4% YoY; Annual Closings Up 29.2% YoY
  • Metrostudy expects annual starts to approach 15,000 over the next few quarters
  • Housing inventory levels are virtually the same as last year, a sign of a healthy market given strong growth in closings.

Metrostudy’s 2Q17 survey of the housing market in the Orlando MSA – Lake, Orange, Osceola, and Seminole counties – shows that 3,924 single-family housing units were started in the quarter, up 13.7% YoY. The annual starts rate of 13,513 units has increased by 14.4% over the same period last year. Single-family quarterly closings totaled 3,478 units, 28.1% higher than 2Q16. The annual closings rate of 13,183 units for the four quarters ending 2Q17 is 29.2% higher than the rate recorded a year ago.

“New home starts in the Orlando MSA were up significantly from the first quarter and a year ago, and were well above closings,” said Anthony Crocco, Regional Director of Metrostudy’s Orlando area. “We expect closings to increase sharply in the third quarter and will likely be strong in the fourth quarter as well. Builders are working out of sales backlogs in many projects in the core of Orlando.”

During 2Q17, the number of new home starts priced $250K and over increased YoY, while the number of starts priced below $250K decreased from 2Q16 levels. The biggest increases in starts were in the $250K to $299K range, up 23.1% from 2Q16, and $300K-$349K, up 31.9% from last year. Base prices are increasing at many projects, although some emerging areas are seeing flat pricing or some discounting when you factor incentives.

Total single-family inventory, which is
comprised of units under construction, finished
vacant units and models, equaled 7,867 units
at the end of 2Q17, up 4.5% compared to last year, and representing 7.2 months
of supply. Under construction housing inventory rose by 231 units to 4,699 units over the past year. Finished vacant inventory increased, but just barely, to 2,603 this year from 2,498 units last year.

In 2Q17, 3,031 lots were delivered to the Orlando MSA versus 3,428 lots in the same quarter a year ago. Vacant developed lot inventory stood at 23,808 lots, a decrease of 11.9% compared to last year. Based upon the annual starts rate, this lot inventory represents 21.1 months of supply, a decrease of 6.3 months from last year.

“The growth in closings in the second quarter portends a strong third quarter, and new home construction growth continues, as backlogs are allowing builders to go as fast as they want or can,” said Crocco.
”Another very good sign for the market is that there has been little or no increase in finished vacant inventory in the market in over two years, while the annual closing rate has increased over 50% in that period. With little housing inventory growth, we would expect starts to continue to grow as well as closings with the Orlando MSA’s annual starts rate likely approaching 15,000 in the next few quarters. The Orlando area’s employment growth is
providing a strong basis for housing demand and there continues to be strong housing demand from internationals, active
adults and investors.”

The following table identifies the top ten communities as defined by annual construction starts:

Community                           Annual Starts

The Villages (Lake) …………………………..937

ChampionsGate (Osceola)………………….415

Storey Lake (Osceola)……………………….356

Summerlake (Orange) ……………………….330

Tapestry DRI (Osceola)………………………325

Reunion Resort & Club (Osceola)…………294

Lake Nona DRI (Orange)…………………….292

Orchard Hills (Orange)………………………..270

Hamlin (Orange) ……………………………….222

Watermark (Orange)………………………….183

For information contact:
Anthony Crocco
acrocco@metrostudy.com

About Metrostudy

Metrostudy is the leading provider of primary and secondary market information to the housing and related industries nationwide. Metrostudy provides research, data, analytics and consulting services to help builders, developers, lenders, suppliers, retailers, utilities and others make investment and business decisions every day. For more information, visit www.metrostudy.com

About Hanley Wood

Hanley Wood is the premier information, media, event, and strategic marketing services company serving the residential, commercial design and construction industries. Utilizing the largest editorial- and analytics-driven construction market database, the company produces powerful market data and insights; award-winning publications, newsletters and websites; high-profile executive events; and strategic marketing solutions. To learn more, visit hanleywood.com.

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