Salt Lake City continues to ROCK

• 2017 Banner Year for New Home Starts: Quarterly Starts Up 28% YoY; Annual Starts Up 17% YoY.
• Home affordability remains a hot topic as new home starts above $350K increased 25% YoY, taking 44% market share, up from 40% in 4Q16.
• Annual lot deliveries totaled 12,706, increasing 42%, but vacant developed lot inventory increased only 0.3% to 13,654, a 19.4-month supply.

According to Metrostudy’s 4Q17 lot by lot survey of every new home subdivision in the Greater Salt Lake region, new home starts during 4Q17 totaled 3,599, a 28% increase over 4Q16 and closings for the quarter were up 21% to 3,067. A total of 12,472 new homes were started (both attached & detached) during 2017, 17% higher than annual starts in 2016. Annual new home closings totaled 11,049, a 13% increase over 2016. Annual starts for single-family detached homes increased 8% during 2017 for a total of 8,433 and annual closings increased 7% to 7,729. Annual starts for attached (for sale) homes totaled 4,039 in 2017, a 42% increase over 2016, and closings rose 32%, for a total of 3,320.

“2017 was another banner year for the Greater Salt Lake market, which once again reached new levels in new home production,” said Eric Allen, Regional Director of Metrostudy’s Utah / Idaho offices. “The normal building schedule in the Greater Salt Lake market is usually slowed during the winter months, however the unseasonably warm weather allowed builders to remain busy throughout the winter months. Home affordability remains a hot topic of discussion in the market as prices for everything related to housing continue to increase. As such, buyers are being pushed into further out locations or into rental homes. Also, with many of the new home buyers coming from out of state, production for higher-priced homes is more predominant.”

In 4Q17, new home starts above $350,000 increased 25% compared to the same quarter last year and now account for 44% market share, up from 40% last year. The median price for a new single-family home is currently $366,800, a 4% increase compared to 4Q16, and 1% above 3Q17. The median price for a new attached home/unit is $250,500, an 8% increase from last year, and up 4% from last quarter.

There was a total of 7,800 new homes in inventory in 4Q17, an 8.5-month supply, up from 7.8 months the same quarter last year. New home inventory for single-family detached homes was 4,984, up 16% over 4Q16, and 4% above 3Q17. Based on the current pace of absorption, this is a 7.7-month supply, up from 7.1 months in 4Q16 and 7.5 months recorded last quarter. Under construction inventory continued to increase from both market expansion and the labor shortage, which has extended our normal build time. Currently there are 4,118 single family homes under construction in the market, which is up 16% from last year and up 3% from the prior quarter, for a supply of 6.4 months. Despite the increase in production, the supply of finished vacant home inventory remains extremely low at 0.9 months, which has been nearly unchanged for the past 6 quarters.

Warmer weather also allowed for development to continue throughout 4Q17 and annual lot deliveries totaled 12,706 in the quarter, increasing 42% compared to last year. Single-family detached lot deliveries increased 35% during 2017 to 8,480. However, vacant developed lot inventory only increased 0.3% to 13,654, a 19.4-month supply. Of this total, only 28% of the vacant developed lots in the market are for homes under $350,000, an 11-month supply. Annual lot deliveries for attached homes are up 58% to 4,226, however vacant developed lot inventory decreased 7% to 2,894, representing an 8.6-month supply, down from 11.5 months recorded in 4Q16.

“Currently, the housing fundamentals are extremely healthy in the Greater Salt Lake market and should remain as such through 2018,” said Allen. “However, prices will push more buyers to the sidelines. Providing housing to our largest buyer pool is becoming increasingly difficult, however highly needed, therefore watch for those opportunities.”