New homes closing and construction permits reach highest levels since 2008

New homes closing had their best month since 2008 with $514 million in sales of single-family homes. New construction permits were also at their highest level since May 2008 with a 12-month rolling average of 1,397 permits or an annual rate of 16,768, helping to end the year on a strong note for an industry that experienced fits and starts throughout 2014.

According to the latest housing report released from the W. P. Carey School of Business at Arizona State University, the Greater Phoenix housing market gained strength from February through July with tight supply below $250,000 and healthy demand for the mid-ranges between $250,000 and $500,000. The high-end luxury market also had an excellent first half but lost a lot of momentum in its upper ranges from August onwards. The rest of the market hesitated for a few months during the late summer and early fall but, at the end of the year, was regaining momentum again.

“As 2016 starts, the market is in much better shape than it was at the start of 2015,” said Michael Orr of the Center for Real Estate Theory and Practice and author of the report. “Every measure is looking better for sellers than it was in January 2015, except for the appreciation rate which has eased slightly but remains about 10 times higher than the overall economy’s official rate of inflation, the Consumer Price Index.”

The report also lists the top developers ranked by closed revenue for 2015. Locally based Taylor Morrison and Meritage Homes placed first and third, respectively.

1. Taylor Morrison - $318M (891 units)
2. Pulte Homes - $286M (936 units)
3. Meritage Homes - $278M (836 units)
4. CalAtlantic Homes - $247M (648 units)
5. Lennar - $179M (551 units)
6. Shea Homes - $178M (511 units)
7. Toll Brothers - $177M (234 units)
8. K Hovnanian - $172M (468 units)
9. Richmond American - $163M (520 units)
10. Maracay - $154M (420 units)

 Additional highlights from the December 2015 report:

• The market share for new single-family homes climbed to 19.1 percent in December, by far the highest reading since 2008.
• Pricing for single-family homes rose again with the median sales price increasing 9.2 percent from $215,000 in December 2014 to $234,850. This rise was partly caused by a surge in sales of newly constructed homes.
• Peoria took the top spot for new home closings in December with a very strong 196. Last month’s leader, Mesa, was close behind with 183 while Gilbert dropped to third place with 174.
• Permits reported by the Census Bureau for single family homes in Maricopa and Pinal Counties have been relatively high over the last nine months and the December total was 1,433, up 30 percent from November. To emphasize the contrast between this year and last year, single-family permits were up 38 percent from December 2014.
• Multi-family permits totaled 772 in December reaching 7,119 reported in 2015, which is down 20 percent compared with 2014. This number is similar to the totals seen in 2002 through 2004.
• The percentage of residences in Maricopa County sold to owners from outside Arizona was 14.0 percent in December, down from 15.3 percent in November and well below 17.4 percent in December 2014.
• Second home purchases made up 14.1 percent of sales in December 2014, a significant decline in second home activity compared with a year ago. This December’s percentage is the lowest for December since the affidavits started recording this information in 2012.
• Non-distressed single-family re-sales rose 11 percent from December 2014 to December 2015. Non-distressed townhouse and condo re-sales rose 17 percent from December 2014 to December 2015.

For more about Orr’s work or to listen to his insights on the December report on a podcast, visit http://research.wpcarey.asu.edu/.

Additional information on demand, supply, pricing, foreclosure starts and completions, home sales, permits, purchasers and the rental market can be found on the complete report at www.wpcarey.asu.edu/realtyreports. The premium site includes statistics, charts, graphs and the ability to focus in on specific aspects of the market.