Like it or not, autumn has arrived and old man winter is fast approaching in Central Iowa. Speaking of crazy Iowa weather, it has actually played a very interesting role in this year’s real estate sales and market activity.
Excessive rainfall in recent months helped turn some building sites into impromptu slip-and-slides, causing delays in construction and contributing to a lower-than-expected number of housing starts. Developers, too, haven’t been able to get in all the plats they had hoped and many are playing catch up following a super wet summer and spring.
Currently, interest rates, talk of future recession, and a dip in home sales from prior years are each at the forefront of everyone’s mind. In reality, weather conditions in recent months have helped “right size” Central Iowa’s available housing inventory, keeping it at a good level and acting as a life vest for builders’ margins heading into Q4 2019.
A trend toward lower mortgage rates, FORECAST TO CONTINUE into the next year, was a defining factor of Q3 2019, and resulted in a little paddle kick for the Des Moines Metro. As of October 1, the total number of active homes on the market was 2,577, an increase of 4 percent when compared to 2,473 a year earlier. So, the inventory of single-family homes has swollen a bit, but is still low with an overall 3.5 months supply.
Four hundred and twenty six of the 2,630 single-family units sold to date in 2019 were new construction homes. To date, if we add the total number of single family homes sold and the total number of pending single family home sales in 2019, the sum is only 1,043 shy of rising to the same mark as year-end 2018. So, with a couple more good months here in the fourth quarter, we hope to see a fairly similar outcome as the previous year.
Today, there are a total of 784 active listings of new construction homes in the Des Moines Metro, versus 925 homes in October 2018. This translates into a current active supply of 6.2 months, compared with 6.8 months a year ago.
I found this statistic to be particularly interesting because of the correlation between housing starts and new construction inventory, as both were down in the most recent reporting period. I also find this reassuring, as a builder in our industry, that we have a good and stable supply of new construction inventory with six months considered the proper buoyancy between a sellers market and a buyers market.
The bottom line is that Des Moines is still seeing great growth and is a hot city. Besides, we were recently ranked No. 1 on CNBC’s LIST OF PLACES where millennials could actually afford to buy homes. Moving forward, builders just need to be calculated in their decision-making process, adjusting expectations to reflect that homes may not move quite as fast as they have in the past two or three years.
If you are looking to stay up to date on the current housing economy, be sure to save the date for our 12th Annual Builder and Developer Luncheon, February 28, 2020, at the Ron Pearson Center in West Des Moines. More info to come!
Meanwhile, I am always available to continue a real-time conversation surrounding Des Moines’ local real estate and new construction market, and can be reached by email at Kalen@PeoplesCompany.com.
To view a complete rundown of my Q3 2019 Housing Statistics, CLICK HERE.