It’s been a disappointing spring buying season for metro Phoenix home builders thus far.
While interest from potential buyers has stayed strong across the Valley’s new-home communities, sales in March and April have been slower than they were last year, according to Belfiore Real Estate Consulting’s KnowledgeBase Current & Future Market Insights report for April released Thursday.
The tepid condition of the new-home market has prompted Jim Belfiore, the report’s author and president of Belfiore Real Estate, to again adjust its forecast for permits downward for the next three years.
Belfiore now is expecting the year-end total to be 13,600 permits — way down from the 17,100 permits he had projected at the beginning of the year. He expects 2015 permits to now be 17,500 and 22,200 for 2016, down from his earlier predictions of 22,000 and 26,000, respectively.
“The bad news for home builders is they have created a glut of supply in previously hot market areas … Potential buyers, as might be expected, feel no sense of urgency to buy because they believe this glut is going to exist indefinitely,” Belfiore said in the report.
The good news is that supply of both new and existing homes for sale have remained stable in March and April, and so have prices, he said. New home prices should only go up by 3 percent this year.
There has also been lots of pent up demand. The Mortgage Bankers Association estimated recently that mortgage applications nationwide for March were up 15 percent http://www.mortgagenewsdaily.com/04152014_mba_new_home_sales.asp from February despite the fact that sales had eased.
Belfiore says pent up demand will continue growing so long as lending standards remain tight and homeowners find they still don’t have enough equity to move.
“People appear interested in purchasing, and population, employment and vacancy data suggest they should be purchasing,” Belfiore said.
- Kristena Hansen
- Reporter- Phoenix Business Journal
Kristena Hansen covers residential and commercial real estate.