NASHVILLE HOUSING 2Q18: New Home Starts and Closings Start the Year Down; One of the Tightest Lot Supplies in the Country is Pushing Prices Higher
- Quarterly New Home Starts are up 12.5% YoY; Annual Starts are down 2.2% YoY. Quarterly Closings are down 9.5% YoY; Annual Closing are down 1.3% YoY.
- The single-family detached median new home price in 2Q18 was $341,715, up 3.2% YoY.
- 2Q18 saw a 5.4% YoY increase in lot deliveries, but the Nashville MSA continues to suffer from a lot shortage due in part to weather, skilled labor shortages, municipality issues and higher material costs.
Metrostudy’s 2Q18 survey of the Nashville MSA’s housing market shows that there were 2,681 new home starts in the quarter, up 12.5% YoY. Annual starts for the 12 months ending June 2018 were at 8,959 units, down 2.2% from 2Q17. Quarterly closings totaled 2,113 in 2Q18, down 9.5% from 1Q17. Annual closings for 2Q18 stood at 8,550 new homes sold during the past 12 months, down 1.3% YoY.
“Builders are rebounding from weather delays in production during 4Q17 and 1Q18, with quarterly starts up YoY and annual starts trending upwards,” said Michael Leidel, Associate Director of Metrostudy’s Nashville market. “Closings are down as rising home prices are forcing some homebuyers out of the market. The single-family detached median new home price in 2Q18 was $351,950, up 4% from the same period last year. The average price point will always be higher and came in at $395,703 this quarter.”
In 2Q18, total housing inventory, which combines the model homes, units under construction, and finished vacant units, increased by 8% YoY to 5,575 units. Units Under Construction stood at 4,309 units, up by 194 units YoY and up 448 units QoQ. Model homes were up slightly from last quarter while the total active community count decreased slightly from 714 to 710 units. With the increase in starts, Nashville’s total housing inventory and months’ supply increased. The months’ supply of inventory now stands at 7.8, up from 6.9 last quarter, within the range of 7 to 8 months considered equilibrium for the region.
Finished but Vacant housing inventory increased stood at 1,079 units, up by 107 units QoQ. Finished vacant months of supply (FV MOS) increased slightly to 1.5 months, and reflects an improvement in the housing inventory levels QoQ. One year ago, the FV MOS was 1.2 months, well below the 2 to 2.5 months of finished supply considered equilibrium for the region.
“Housing shortages continue to put upward pressure on rising home prices,” said Leidel. “Weather, skilled labor shortages, municipality issues and higher material cost are partly to blame for the lot shortages, but whatever the cause, the delivery of additional finished lots is not keeping pace with demand. With prices at or above previous peaks, the new homebuyer pool may continue to weaken, especially at the higher end of the market.”
For information contact:
Michael Leidel – 615-828-2888
About Metrostudy: Metrostudy, a Hanley Wood company, is the leading provider of primary and secondary market information to the housing and related industries nationwide. Established in 1975 in Houston, Metrostudy provides research, data, analytics and consulting services that help builders, developers, lenders, suppliers, retailers, utilities and others make investment and business decisions every day. www.metrostudy.com
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