The number of single-family homes listed in the Des Moines Metro inched slightly upward in 2018, as sales growth slowed and the affordability of new construction contributed significantly to our present market conditions.
There are currently 2,132 active single-family homes on the Des Moines market, translating into a 2.8-month supply and an approximate increase of 8.7 percent from a year ago. Given that a six-months supply reflects stability, we have continued to view the Des Moines Metro through the lens of a seller’s market, especially in price points below where builders are able to provide inventory.
What we are seeing today is the tale of two markets, including a resolute “resale” market with the majority of listings under the $300,000 price point. The majority of the other market – new construction single-family homes – comprises listings over the $300,000 sales price.
Years 2015, 2016 and 2017 were all big growth periods in total sales, new construction sales and increased values. The MLS data for last year shows that there were 9,095 single-family homes sold and 1,575 new homes sold. Total sales in 2018, compared with the year-earlier period, however, were down by 3.6 percent as new construction sales fell by 6.3 percent.
As I outlined on March 1, during the 2019 Builder & Developer Luncheon, the affordability factor in new construction has played a gigantic role in dividing these two markets over the past several years. When you break down only new construction active listings, there are currently 951 new homes on the market, a 7.3 months supply of inventory, compared with an inventory of 6.7 months at this time last year.
Construction affordability has made a huge shift over the past 10 years. In 2008, 88 percent of home sales tracked through the MLS were under $300,000. When we compare that to 2018, only 37 percent of single-family homes in the new construction category were sold under $300,000
In 2012, the average price of a new construction home in the Des Moines Metro was $266,000, compared to $343,000 in 2018. On the flip side, following years of rather significant hikes in land, labor and materials, the average cost of construction for a new home edged two percent lower in 2018, compared with a year earlier.
I also found it notable that 45 percent of all active single-family homes on the market today are new construction listings. This number has historically been a smaller percentage of the overall inventory. Alternatively, the resale sector is robust and continuing to see fewer days on the market and greater appreciation in values year over year.
In addition to a recap of my Q1 2019 HOUSING STATISTICS, Daron “Farmer D” Joffe and CoreLogic’s Ralph McLaughlin were both on hand during Friday’s builder luncheon to help highlight conditions in the Des Moines Metro. Generally speaking, 2018 was a strong year – though it did pull back some locally, and to some extent mirrored what we saw as part of national trends. This decline was a result of several factors, especially the rise in interest rates. Our builder luncheon presentation slides, including a synopsis for each of the 19 communities I track in the Des Moines Metro, can be found by CLICKING HERE.
All this data and analysis should serve as a reminder to our industry that not everything works 100 percent of the time. From talking to bankers and builders, there are some new homes hitting their first anniversaries, which hasn’t been as typical during the past couple of years.
For anyone planning out their year and lot inventory, finding a strong foothold may require some evaluation of which price points and communities could have the strongest potential upside as the spring building season gets underway. As always, my door is always open to discuss additional information, insights and information. Feel free to CONTACT ME directly.