NASHVILLE 4Q15 HOUSING: New Home Starts & Closings Surpass 3Q15 Records; Strong Demand Drives Up Prices; Lot Shortages Of Growing Concern
(From Metrostudy News, February 15, 2016. Click HERE for direct link.)
FEBRUARY 2016 – Metrostudy’s 4Q15 field survey found that the Nashville MSA recorded 1,827 residential construction starts in the quarter, up 36% from 4Q14. Annual new home starts ending December 2015 numbered 7,395, up 19% from 4Q14. New construction starts in the fourth quarter set another new record high for the region, surpassing the prior record set in 3Q15. Quarterly closings numbered 1,852 in 4Q15, up 19.7% YoY and up 5% from 3Q15. Annual closings for 4Q15 totaled 6,529, up 12.7% YoY, setting a new record high for new homes sold in a 12-month period.
“Continued strong demand and supply in the Nashville region, evident in the record starts and closes in the fourth quarter, has translated to higher land and finished lot prices and eventually into higher new home prices,” said Eugene James, Director of Metrostudy’s Nashville region. “The single family detached median new home price in 4Q15 was $328,400 and the average price was $356,100, both all-time record highs.”
In 4Q15, Nashville’s total housing inventory, made up of model homes, units under construction, and finished vacant units, increased 26% YoY to 4,182 total units. The months supply for total housing inventory climbed to 7.8 months from a 7 months in 4Q14, within the 7 to 8 months considered equilibrium for the region. The overall months supply increase is primarily due to the rise in construction starts that increased the number of units under construction. In 4Q15 Under Construction inventory was 36% higher year-over-year at 3,241 units. Finished Vacant (FV) housing inventory increased from 3Q15 by a needed 23% to 826 units and the FV months supply increased to 1.5 from 1.3 months the prior quarter. With equilibrium at around 2 to 2.5 months of finished supply, the region continues to experience an under-supply of finished homes.
In lot development, the finished lot supply has been low all year and ended 2015 at a new record low. The 12 months ending December 2015 saw 5,138 new lots delivered to the market, fewer than in the same period last year. The fourth quarter lot delivery of 1,529 was similar to what was delivered in 4Q14 (1,596). More lots are currently in the development pipeline and are slowly being created, but with 7,395 annual starts outpacing 5,138 annual lot deliveries, this market’s lot shortage continues. Inventory of Vacant Developed Lots (VDLs) fell to 9,285 units, a 20% decline YoY and the lowest level on record. The VDL months of supply (VDL MOS) declined to 15.1, also the lowest on record, well off the normal of 24 VDL MOS of finished lots for the Nashville region and a decline from 22.3 in 2014 and 26.6 in 2013.
“The shortage of finished lots is spreading throughout the region and is a growing concern in the construction industry,” said James. “Four counties fell below normal finished lot levels of 18 months, with the most severe lot shortages in Rutherford County, at 10.7 months, Williamson, declining to 11.6, Davidson, down to 11.4, and Wilson at 16.5 months. The good news is the abundance of new lots and future subdivisions that are currently being created. We expect to see lot deliveries to increase in 2016.”
Metrostudy, a Hanley Wood company, is the leading provider of primary and secondary market information to the housing and related industries nationwide. 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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