The Atlanta real estate market saw exponential growth in new home construction during the second quarter of 2013, prompting everyone in the industry to declare that the market is on fire. With strong job growth and a lack of inventory, the demand for the construction of Atlanta new homes appears to only be increasing.
According to a report from Metrostudy, a national housing information and consulting firm, metro Atlanta builders started 3,713 homes during the second quarter of this year. That is a 77 percent jump over the same time frame in 2012. In addition to the growth in demand for housing, employment in Atlanta is up 2.4 percent from last June, and more than 56,000 new jobs were created during that time.
“Job growth is one of the single most important drivers of home demand, and Atlanta’s pace of job growth is one of the highest in the nation,” said Eugene James, Regional Director of Metrostudy’s Atlanta market. “This ranks Atlanta in the top 10 among all metro areas in terms of year-over-year job creation and we have recovered 75 percent of the jobs that were lost to the Great Recession.”
Another important factor in new home demand, listed by James, is the lack of inventory homes available on the market. As a result of the shrinking home supply, Atlanta has actually been what is traditionally considered a seller’s market for about the past year. Properties currently listed for sale through the Multiple Listing Service amounted to only a 3.6 month supply.
Together, all of these factors have contributed to an outstanding first half of 2013 for Atlanta’s single-family housing market. On a yearly basis, housing starts are up by 70 percent and as of the end of June, Atlanta builders have started 10,965 new homes. This marks the highest annual tally of starts since the fourth quarter of 2008.
“Are we building too many new homes? Not hardly,” said James. Their field survey revealed that there are only 2,180 finished homes currently standing in inventory, which is a record low according to Metrostudy’s records. The inventory homes work out to be only a 2.6 month supply, a number that has not been that low in more than 12 years.
New home starts have historically been a good indicator of the upcoming demand for new homes and closings that are occurring. The current new home annual closings of 10,060 are 27 percent above last year’s volume. With an increase of 33 percent over last year, the second quarter of 2013 saw a total of 2,876 home closings.
The strong demand and low inventory is also affecting home prices by pushing them higher. In the second quarter of 2013, the median sales price of new homes reached $271,500 compared to the median price of $259,900 from just one year earlier.
Metrostudy expects to see the current trends continue throughout the rest of this year and in to 2014, including greater demand for new homes in Atlanta and increasing home prices due to the limited supply of homes and home sites currently available in the core market areas.
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