It’s been quite a year, with major events shaping the economy, housing market, and everyday life. Inflation and interest rates remained hot topics, impacting everything from mortgages to new construction costs. The real estate market saw a shift as affordability challenges persisted, while labor shortages and supply chain disruptions still exist, things have improved on that front for builders. On a global scale, geopolitical tensions, technological advancements, and climate concerns influenced markets and policies. As we step into a new year, it’s worth reflecting on how these changes have shaped the housing industry—especially here in the Des Moines metro.
Inventory Trends: A Balancing Act
Active Inventory
Active inventory in the Des Moines metro area has increased compared to last year but has declined since Q3 2024. Currently, there are 2,037 single-family homes on the market, up from 1,684 a year ago. However, this is a drop from the 2,277 active homes recorded at the end of October, when supply stood at 3.6 months. Today, the metro’s months’ supply sits at 3.1.
For context, the national combined months’ supply for both new and existing single-family homes was approximately 4.2 months as of November 2024, according to the U.S. Department of Housing and Urban Development. This means the Des Moines metro continues to have a tighter supply than the national average.
Looking at the end of Q4 over the last six years, the Des Moines metro housing market has experienced significant shifts in inventory levels and the share of new construction (NC) homes. Total active inventory peaked at 2,190 homes in Q4 2018, then dropped sharply during the pandemic to just 1,179 homes in Q4 2021 before gradually rebounding to 2,037 homes in Q4 2024. Meanwhile, new construction has fluctuated, hitting a low of 629 NC homes in Q4 2020 but climbing back to 946 NC homes in Q4 2024.
One notable trend is the changing proportion of new construction in the market. In Q4 2021, NC homes made up a striking 68% of total inventory, reflecting a period when resale homes were in extremely short supply. However, this percentage has steadily declined, now standing at 46% in Q4 2024, signaling a return to a more balanced mix of resale and new homes. This shift suggests that while new construction remains a crucial part of the market, resale inventory has increased, giving buyers more options outside of new builds.
Pending Sales
The total number of single-family homes currently pending at 886 is a significant indicator of market activity, showing growth compared to previous years. At the end of Q4 last year (2023), there were 833 homes under contract, and at the same point in 2022, there were 757 pending homes.
This upward trend suggests increasing buyer demand or confidence in the housing market, even as interest rates and economic conditions evolve. The steady growth over the past two years may reflect strong interest in the Des Moines metro area and its surrounding communities, aligning with factors like affordability compared to national housing prices, family-friendly amenities, and quality of life.
The new construction (NC) market is showing promising growth, with 315 new homes currently pending compared to 285 at the same time last year. This increase highlights a positive trajectory in the demand for new construction homes, driven by buyers prioritizing modern features, energy efficiency, and the ability to customize their living spaces.
Personally, I am seeing strong custom and build-to-order (BTO) leads, with many buyers expressing a desire to customize their homes. If they are going to leave their current 3% interest rates, they want to ensure their next home meets their specific needs and preferences. This trend underscores the importance of offering flexible design options and high-quality finishes, as buyers are willing to make the move for a home that fits their vision.
Sold Data
The 2024 data reflects a notable shift in the housing market, with 7,877 single-family homes sold compared to 7,718 in 2023. While this is still below the 2022 total of 9,379, the slight rebound suggests that we may have seen the market’s bottom in 2023, signaling a small but positive sign of recovery.
One of the key highlights is the increasing share of new construction (NC) sales, which accounted for 24% of total sales in 2024 (1,894 NC homes sold), compared to 22% in both 2023 and 2022. This consistent growth in NC sales emphasizes the demand for new, customizable homes as buyers prioritize quality and tailored options when considering a move, especially given current higher interest rates.
However, it’s important to note that the higher percentage of new homes sold in recent years is likely influenced by a higher percentage of active new construction inventory compared to previous years. With a relatively larger supply of new homes available on the market, buyers are naturally drawn to the modern features and benefits of new builds. This increase in inventory has helped new construction homes capture a larger share of total sales.
The trend since 2020, where NC homes consistently accounted for over 20% of total sales, underscores the importance of the new construction sector in stabilizing the housing market.
The average sales price of a new construction home in 2024 was $448,682, with an average size of 1,677 above grade square feet. This reflects only a slight increase from 2023, where the average price was $446,881. After experiencing a 9% increase in 2021 and a significant 16% jump in 2022, 2024 appears to mark a stabilization in new construction home pricing.
Looking Ahead to 2025
Looking ahead to 2025, interest rates and inflation will continue to play a major role in shaping the housing market. While the Federal Reserve has signaled potential rate cuts, the timing and extent remain uncertain, meaning mortgage rates could stay elevated compared to pre-pandemic levels. If inflation eases further, borrowing costs may gradually decline, improving affordability and boosting buyer confidence. However, if economic volatility persists, homebuyers and builders alike may face continued challenges. In the new construction sector, material and labor costs will be key factors, as builders navigate pricing pressures while meeting demand. Ultimately, many signs point to 2025 bringing a more balanced market, but much will depend on broader economic trends and policy decisions.
Check out full stats for a breakdown of each community I track here.
Don’t Miss the Builder & Developer Luncheon
For an in-depth analysis of the Des Moines metro housing lot inventory and new construction market, join us on March 11th from 11:00 AM to 1:00 PM at the 18th Annual Builder & Developer Luncheon. Hear from experts, including:
- Elliot Eisenberg, Chief Economist, GraphsandLaughs – ‘Economic Trends Shaping Housing and Construction’
- Steve Bruere, Diligent Development, and Jim MacRae, Design Workshop – ‘Designing the Future: Unique Land Planning and Development, Including Middlebrook Agrihood’
- Kalen Ludwig, Director of Sales and Marketing, Diligent Development – ‘Local Housing Trends, New Construction, and Development Insights’
RSVP today to stay informed about the trends shaping our market.
As we brace against the current cold, remember that warmer days—and a warming housing market—are just around the corner.