Earlier this month, the groundhog told us “spring is coming” as he crept out of his burrow after his long winter sleep. Spring, indeed, is coming and for the real estate and homebuilding industries this is an exciting time of year!
We left off in January looking ahead to 2020 with mixed expectations as some were feeling there was great potential laying ahead while others felt a market slow down could be predicted. As we approach the end of February 2020 and let the data do the talking, it seems the optimists were right and there IS great potential to come. Total active listings has decreased and mortgage rates have stayed low.
To begin, let’s look at the Des Moines-area single family homes that are actively pending, number of homes sold, and then how many months of active inventory supply that would allow. (Months of supply is measured by how many months it would take for the current inventory of homes on the market to sell, given the current pace of home sales. For example, a six-month supply reflects stability in the marketplace between sellers and buyers.) In February of 2020, there were 1,970 total active listings in the Des Moines-area with 1,197 in pending status. This gives the area 2.7 months worth of market supply of existing single-family homes, remaining much the same as it has for the past three years. Worthy of pointing out is the fact that the number of single-family homes on the market at this point in 2020 is down 7.6% compared to the same time last year. This indicates that the momentum heading into spring is very encouraging with the numbers showing us that it will be a seller’s market.
The number of new construction active homes on the market is also a notable point. 38% of the 1,970 homes on the market are new construction listings however, overall there has been a significant decline of new homes on the market. Compared to this same time a year ago, there are 200 less homes to choose from. This is a 20% decrease! The reason for this is not for certain; some would argue the weather, some would simply say discipline by the builders. Regardless of the reason, most would agree that this is very unexpected given that three national home builders entered our marketplace in 2019.
The average sale price of a new construction home was $346,000 per the MLS, up by only 1%, at the end of 2019. Today the average MLS price for a new construction listing is $336,000. The New Construction Months Supply chart tells an interesting story. It breaks down different price points and shows the months supply the last 3 years. The lower months of supply used to be in price points from the lower range ($200,000-$249,000 and $250,000-$299,000) and builders were smart to follow that demand. But now, due to a shift in the product, we are seeing low inventories in the $350,000-$399,000 and $400,000-$449,000 price points, indicating that for some builders in certain communities, there may be good opportunities.
Today we see 1,197 pending single family homes, compared to 1,046 a year ago. Our pending activity is up 151 more homes or 14% year over year, which is a truly wonderful sign.
There are 347 new construction single family homes pending; up by 90 homes year over year. When looking forward, one would tend to agree with the groundhog. Spring is coming and it will be an exciting time for real estate agents and home builders across the Des Moines-area. Please don’t hesitate to reach out to get more info on lots I am marketing or new construction stats!
In addition to a recap of my Q1 2020 HOUSING STATISTICS, Steve Nygren of Serenbe and CoreLogic’s Frank Nothaft were both on hand during Friday’s Builder and Developer Luncheon to help highlight conditions in the Des Moines Metro. 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.