According to Metrostudy’s most recent quarterly lot by lot survey of every subdivision, there were 3,017 new homes started during the 4th quarter of 2018, this is down 14% compared to 4Q17 and down 20% from last quarter. While this decrease may raise some concerns in the market, it is not expected to continue for a long period of time.
New home closings for the quarter totaled 3,218, a 6% increase compared to last year but down 4% from last quarter. Annual starts for all of 2018 increased 8% compared to 2017 for a total of 13,233, while this pace is down 4% from last quarter. Annual closings for 2018 increased 10% compared to 2017 for a total of 12,147. Annual starts for Single Family detached homes totaled 8,975 for 2018, a 6% increase over 2017, and closings increased 10% to 8,520. Annual starts for Townhomes jumped 26% over 2017 for a total of 3,740 and closings increased 13% to 3,057. New starts for Condominium units decreased 33% compared to 2017 for a total of 518, while closings increased 5% to 570.
“Since 2012, new home starts in the Greater Salt Lake market have increased an average 18% year over year,” said Eric Allen, Regional Director of Metrostudy’s Salt Lake City market. “While new home starts are showing a slight decrease for 2018, the housing market remains very robust. Affordability continues to be one of the main pressures for the housing market, as inventory is low and costs to build and develop remain high. Producing new homes at prices the majority of the market can afford is becoming increasingly difficult, however demand for these homes is extremely high. If builders can find a way to build homes below $300,000, the market will continue to flourish.”
New home starts under $300,000 continue to lose ground and now only account for 28% of all starts across the market. Last year at this time, 38% of starts occurred in this segment. Currently, the median price for a new detached single-family home in the Greater Salt Lake market sits at $392,000, which is a 7% increase compared to this time last year and 2% higher than last quarter. The median price for a new attached home/unit is now $272,700, which is up 9% from last year at this time and 1% above last quarter.
Total new home inventory in the Greater Salt Lake market has increased 14% since last year at this time to 8,656 homes. Despite this increase, the supply has only increased from 8.2 months to currently 8.6 months, well within the healthy equilibrium levels measured at 6-9 months. Under construction inventory has been steadily increasing and is now 15% higher that 4Q18, however decreased 5% from last quarter for a total of 7,372. Currently, this is a 7.3 month supply, up from 7.0 months last year at this time. Finished vacant home inventory has been well below equilibrium levels (measured at 2-2.5 months) since 2012.
Annual new lot deliveries in 2018 increased 22% over last year for a total of 14,551, signaling that new lot development is starting to increase. Vacant developed lot inventory increased 9% compared to 4Q17 and currently sits at 15.6 months, unchanged from last year and up from 14.3 months recorded last quarter.
The Greater Salt Lake market experienced significant economic growth during 2018 partly due to the large number of people moving in from out of state. The majority of these individuals are coming to the market for employment, therefore job growth continues to grow. Despite some negative news and recent decreases in the new home market, the Greater Salt Lake market is bouncing along the top and is expected to remain stable through 2019.