The average demand for new homes increased 2.83% in April to 7.03 on our 10-point scale, according to April results of the Metrostudy-BUILDER Demand Index that looks at buyer interest and builder demand for new lots in 36 markets.
Nine markets moved up one point between March and April, and three markets declined (Naples-Ft. Myers, Sarasota-Bradenton, and Raleigh-Durham). The three markets posting decreases still fall in the “good” range of 5 or above for buyer interest, with regional directors in each of those markets posting a score of 7 in April. Year over year, the average score for new home demand increased 6.30% in April.
Markets in the West—12 of the 36—increased 12.99% to an average score of 7.25, compared with April 2015’s average of 6.42. Demand for new homes in the west region is strongest in Seattle (10), Denver (9), Las Vegas (8), Reno (8), and Salt Lake City (8). In Albuquerque, regional director John Covert has scored new-home demand at a 4 every month since January 2015, reporting that a “stagnant economy continues to temper demand.”
Average demand for new homes in Metrostudy’s 18 southern markets was unchanged compared with April 2015, with a score of 7. Demand is highest in the Nashville market (9), while the Rio Grande Valley continues to bring down the region’s average with new-home demand scores of either 3 or 4 for the past year.
Metrostudy’s three Midwest markets all received a 6 in April, an increase most notable for Chicago, where new-home demand scores have fluctuated near the lower end of the range for the past year. According to Tom Deloye, Chicago builders are cautious, partially due to the “anemic job growth present in the market.” He expects builders will roll out incentives to drive sales and lower inventory, but predicts a “flat to slightly better selling season this year.”
Regional directors in the West and South are most optimistic about spring selling season performance. Despite lingering doubts about the economy, the gains seen in new-home demand scores year over year across most markets indicate that the recovery continues, even if the pace has slowed.