TRIAD HOUSING 3Q18: New Home Construction Keeps Up Prolific Pace; Affordability Remains Favorable, Compared to Triangle & Charlotte Markets
- 3Q18 Quarterly New Home Starts Surpass 3-Year Average
- Quarterly Closings are flat YoY; Annual Closings are up 3.9% from 3Q17
- Compared to nearby Triangle and Charlotte, Triad housing falls more in line with affordability standards, with about 69% of Triad’s new home construction inventory priced below $250K.
- Alamance County is quickly emerging as a market for developers, with 24% of the total market share of new home starts in Triad, taking share from Guilford (35%) and Forsyth Counties (25%).
Metrostudy’s 3Q18 survey of the housing market in North Carolina’s Triad region – which encompasses the Greensboro-High Point MSA, Winston-Salem MSA and Burlington MSA – showed there were 961 new home starts in the third quarter of 2018, and the number of annual starts totaled 3,450 detached and attached units. New home closings totaled 871 units for the third quarter, about equal to the 3Q17 number. The number of annual closings from the past four quarters totaled 3,314 units, a 3.9% increase over the year prior.
“Quarterly starts in the Triad kept up its prolific pace of new construction in the third quarter with 961 new home starts during the three-month survey period, an increase from the three-year average that’s been running at about 770 new starts per quarter,” said Amanda Hoyle, Regional Director of Metrostudy’s Triad region. “The trailing 12-month count of new home starts slowed its pace to about a 5.4% growth rate, primarily due to a weaker first quarter of activity. The Triad had been averaging a double-digit annual growth trend over the previous five consecutive quarters.”
The average base price for a single family new home in the Triad has been increasing, on average, about $1.78 a square foot each quarter for the past year and is up 8.7 percent year-over-year. In third quarter 2018, the average single family home measured 2,454 square feet and carried an average base price of $259,241, or $106.25 a square foot. The year prior, the average home was only slightly smaller at 2,417 square feet with a base price of $238,580, or $98.89 a square foot. The Triad housing market falls more in line with affordability standards compared to its counterparts in the nearby Triangle and Charlotte regions in North Carolina. About 69% of the Triad’s new home construction inventory had a base price below $250,000. The median price of a new home sold in North Carolina in 2017 was around $288,800.
In 3Q18, total inventory, which includes model homes, finished vacant homes and homes under construction, grew 6.9% YoY to more than 2,100 units. Based on the closings pace over the past 12 months, total inventory represents about 7.7 months of supply of new homes. The Triad region’s historical equilibrium for new home inventory is between 7-8 months of supply. The inventory of 511 finished vacant homes in 3Q18 was down 10.6 percent from the previous quarter, representing about 1.8 months’ supply, which is below the 2-3-month range that Metrostudy considers normal for standing inventory.
The 7,693 vacant developed lots, or lot properties with streets and infrastructure in place, counted as part of Metrostudy’s third quarter survey represented a 1.6% decline in the number of available builder lots compared to 2Q18, in spite of developers adding 839 new lots to inventory in the quarter. The Triad’s inventory of VDLs dipped below 26.6 months of inventory, within the 24-18-month range that Metrostudy considers normal for lot supply.
Construction plans for several Triad area communities that had been put on hold at the peak of the housing downturn are showing strong signs of life again as the area’s inventory of vacant developed lots begins to dwindle. Many of those new communities are also not in the previous dominant counties of Guilford and Forsyth, and now Alamance County, which includes the city limits for Burlington and Mebane, has been emerging much more quickly. The county now accounts for about 24% of the total market share of new home starts in the Triad compared to low double-digit market share only three years ago. Guilford County’s reign has dwindled to 35% market share compared to 39% three years ago. Forsyth’s market share dropped to 25% compared to a 35% share in 2015.
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