GREATER SALT LAKE HOUSING 2Q18: Climbing Home Prices Push Growth into Attached Housing
- New Home Starts in 2Q18 are up 25% YoY while closings are up 11% from 2Q17 levels
- We are seeing extremely rapid grown in attached housing – with annual starts for attached units up 43% YoY compared to 13% for single family detached housing
- While the Greater Salt Lake market is considered to be one of the more affordable markets across the country, local buyers are finding it difficult to qualify for a new home: 66% of all new home starts in the market are now priced above $300k
- As of the end of June, the median price for a new detached single-family home in the Greater Salt Lake market reached $377,700, which has increased 5% over the past year and up another 2% from last quarter
According to Metrostudy’s quarterly lot by lot survey of every subdivision, the Greater Salt Lake market started 3,725 new homes during the second quarter, which is a 25% increase over 2Q17 and last quarter. New home closings for the quarter increased 11% over 2Q17 and 22% above last quarter. Year to date, new home starts have already exceeded last year’s pace by 25%, and closings are up 8% compared to the same time frame. Annual starts have increased +21% over last year and as of June totaled 13,657. Annual closings are up 15% compared to last year at this time for a total of 11,735.
“While the gap between starts and closings appears to be slightly widening, this is a result of the rapid growth in attached housing,” said Eric Allen, Regional Director of Metrostudy’s Salt Lake City market. “As new attached buildings are started, it takes time to close those units, but those closings usually happen very rapidly, therefore we expect closings to keep pace with starts as we get closer to the end of the year. Annual starts for Attached (for sale) homes totaled 4,614 as of June, a 43% increase compared to last year, and closings rose 25%, for a total of 3,391. Annual starts for Single Family detached homes increased 13% compared to last year for a total of 9,043 and annual closings increased 11% to 8,344.”
New home prices continue to be a topic of discussion, and while the Greater Salt Lake market is considered to be one of the more affordable markets across the country, local buyers are finding it difficult to qualify for a new home. Raw land prices and material costs are two of the main reasons home prices are increasing so fast, along with the labor shortage. Building material prices are feeling even more pressure with the new tariffs put in place and the market is bracing for the potential impact of these increases. Currently, 66% of all new home starts in the market are priced above $300,000. As of the end of June, the median price for a new detached single-family home in the Greater Salt Lake market reached $377,700, which has increased 5% over the past year and up another 2% from last quarter. The median price for a new attached home/unit is $263,300, which is up 11% from last year at this time and 2% above last quarter.
Unemployment in the Greater Salt Lake market remains at extremely low levels and one of the lowest across the country. As of May, the unemployment rate decreased .3% from last month to 2.7%, and down from 3.1% recorded in May of 2017. Jobs appear to be relatively easy to replace and most employers are finding it difficult to find qualified employees to hire. According to the Wasatch Front MLS, as of June there were 40,012 used homes sold over the past twelve months in the Greater Salt Lake market, a 3.6% increase compared to last year at this time. As of the end of June there were approximately 5,927 used homes listed for sale, which translates to a 1.8 month supply, down from 2.2 months recorded in June 2017, and unchanged from last month.
While home prices continue climbing and threaten to slow the market at some point as affordability tightens, the Greater Salt Lake market is projected to remain healthy for the foreseeable future. With a rapidly increasing economy and high in-migration counts, homebuyer interest should remain high.
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