The old adage might be "go West" but new home buyers aren't listening. A recent analysis by CoreLogic shows that the strongest new home sales markets are overwhelmingly in the South, especially Texas and North and South Carolina.
New home sales increased nationally in the 12 months ended in January by 3 percent but rose by as much as 17 percent in some fast growing southern metropolitan areas. The region claimed eight out of 10 of the markets where the sales increase was the greatest compared to the same period a year earlier, led by Nashville the 17 percent gainer. One of the two big increases outside of the South was in San Jose (the other was Portland, Oregon, in eighth place) where new home sales rose 14 percent.
Atlanta had the third greatest increase at 10 percent, which CoreLogic calls particularly remarkable as the area is only now recovering from its prolonged bout with foreclosures. Distressed sales still constituted 16 percent of its total market during the period. Jacksonville, Florida also saw increased new home sales of around 10 percent. The other southern metro areas in the top ten were Greenville, South Carolina; Sarasota-Bradenton; Fort Worth-Arlington; San Antonio, and Miami.
CoreLogic also looked at those markets where new home sales made up the largest portion of all sales and again these were predominantly in the South including all but one of the top ten. The market with the highest new home sales share was El Paso, where 22 percent of all sales were new construction, compared with only 8 percent nationally. The author of the article regarding these sales, Sam Khater says that this is not atypical of El Paso where the overall housing market has been stable and the portion of new home sales has been as well, averaging 22 to 24 percent over the previous 15 years.
In Raleigh 21 percent of sales were of new homes, followed by Charleston, South Carolina at 20 percent. Khater says that Charleston is also one of the five cities he identified out of the top 50 that has more new sales than it did in the early 2000s. Prices for new homes however have been increasing rapidly, up $60,000 in two years, a greater appreciation than over the previous 12 years, which may impact sales in the future.
Three Texas cities, Houston, San Antonio, and Austin took positions four through six, each with a slightly smaller than 20 percent new home sales share. Rounding out the top ten were Charlotte, Jacksonville, Colorado Springs, and Orlando. New homes sales in each topped 15 percent of the market.
The 441,000 new homes sold over the 12 month period were still well below the 660,000 average for new home sales over the last 50 years. CoreLogic says however that in many of the remaining metros with solid job growth, the reality of very low inventory of unsold new homes, declining vacancies and rapid price appreciation will lead to more construction in the next few years that will lift many more markets above their current new home sales trajectory.
