TAMPA HOUSING 4Q18: Growth Continues as 2018 Comes to a Close – Production Moves into Higher Price Points Even as Builders Try to Target More Affordable Product
- Quarterly new home starts are up 18.5% over 4Q17 numbers – the annual starts rate for 2018 is up 9.6% from 2017
- 4Q18 closings are up 2.5% YoY while annual closings were up 12.5% from 2017 levels
- Production is pushing into the higher price ranges with starts up 37.9% in the $350k-$400k range and up 17.2% overall in the over $250k range.
- While we ended the year with 11,632 new home starts (consistent with our forecast), the lack of job growth will put a damper on our 2019 forecast. The biggest positive over the last 60 days is that interest rates fell back near 4.5%.
Metrostudy’s 4Q18 survey of the Tampa housing market shows that 3,038 single-family units were started in the quarter, an increase of 18.5% compared to 4Q17. The annual starts rate, compared to last year, increased by 9.6%, to 11,632 annual starts. Single-family quarterly closings totaled 2,868 units, which was 2.5% higher than the 2,799 closings during the 4th Quarter of last year. The annual closings rate was 11,252 units. This was 12.5% above the annual closings rate of 10,006 units as of 4Q17.
For the twelve months ending December 2018, annual new home starts in price ranges under $250k totaled 4,789 units. This was up 0.3% from the 4Q17 annual activity of 4,776 units in prices less than $250k. New home starts in prices over $250k grew by 17.2% from 5,839 units as of 4Q17 to 6,843 units as of 4Q18.
The table below indicates the current distribution of annual starts by price range:
“Our very positive 4Q18 starts number (up 18.5% versus 4Q17) reflects an expansion of the backlog,” said Tony Polito, Regional Director of Metrostudy’s Tampa market. “We started 475 more units than 4Q last year, but compared to that quarter, we saw a 598 units increase in Under Construction units. There is currently a 4.8-month supply of units under construction versus 4.6-months a year ago. The biggest nominal gain in starts was in the $200 – $250k price band, with 358 additional annual starts within this price band. This was followed by 345 more units started in the $250 – $300k price band, so builders are trying to target more affordable prices. However, the largest percentage increase was the 37.9% jump in starts for product priced $350 – $400k.”
MLS Single Family sales year to date thru December were down 0.4% from the same period of 2017 with 48,050 sales. Lack of supply is a significant factor, as supply is very low at 2.9 months. The median home price in December 2018 was up by 4.4% to $235,000. Prices have fallen from the June 2018 peak of $245,000 but remain up year over year. Rising rates will push prices closer to the historic average.
The annual closing pace was above 11,250 units for the first time since 3Q 2007. The frosty December for the stock market prompted the Federal Reserve to indicate they may pause somewhat on the number of interest rate increases anticipated in 2019. Most economists still predict 2.0 – 2.5% GDP growth in 2019. Metrostudy’s housing demand forecast of 11,667 units of “for sale” demand was based on the CBSA adding 30,000 new jobs annually. That level of job growth was present until the last two months of 2018, when job growth fell below 24,000. While we ended the year with 11,632 new home starts (consistent with our forecast), the lack of job growth will put a damper on our 2019 forecast. The biggest positive over the last 60 days is that interest rates fell back near 4.5%.
The table below ranks the top ten communities in the market by annual starts:
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