Metrostudy’s 2Q16 survey of the Maryland housing market – which includes DC but excludes the Eastern Shore south of Queen Anne’s County – shows quarterly home starts, attached and detached, numbered 9,311 during the year ending 2Q16, 9% lower YoY. Starts in 1H16 were down 3% from the first half of last year. The annual closings rate as of 2Q16 was 3% higher YoY.
“There are some mixed signals from housing demand indicators in the second quarter, and the uptick in annual closings helps the new-home inventory picture, but Metrostudy generally considers the market to be flat compared to last year,” said Ben Sage, Director of Metrostudy’s Mid-Atlantic Region. “In contrast, the resale home market is exhibiting some strength, with a 15% increase in units sold through the MLS during the year ending June 2016, according to MRIS. The median price of an existing home sold in Maryland was $299,700 in 2Q16, flat compared to 2Q15. The median price of a new home sold was $430,500, also flat from one year ago, but 18% higher than in 2Q12 and double the 9% increase for resales over the same period. This growing price spread between new and resale homes may help explain why the resale market is strengthening while the new-home market is flat.”
Looking at 2Q16 starts activity in the region by county, Anne Arundel and Prince George’s are on top with 1,343 and 1,338 annual starts ending 2Q16, respectively. Activity in both counties was 4% lower than their pace one year ago. Montgomery County and Washington, DC, saw the largest numerical declines, with annual starts falling 352 and 289 units, respectively, compared to one year ago. This is mostly due to supply limitations in these areas, as there just isn’t enough land to accommodate the demand. The biggest mover in the first half of 2016 was Harford County, who led the state in both the numerical and percentage increase in starts. The 459 starts during the year ending 2Q16 are up 49% from one year ago. Magness Mill by Ryan Homes is the top community in Harford, and new openings in the county include Laurel Ridge by Toll Brothers and Magness Farms by K. Hovnanian Homes.
In 2Q16, overall inventory of vacant developed lots (VDL), or finished lots, numbered 12,648, up 3% from one year ago. This is for all product types, including attached product as well as custom lots. The corresponding months of supply remains quite low at 16, which is largely unchanged since mid-2013, as Maryland is one of the most land-constrained markets in the country.
With starts down, new-home inventory levels improved in 2Q16 and finished empty new-home inventory declined to 2,165 units, down 2% from one year ago and down 10% from 1Q16. Single family and townhome inventory alone represents 1.6 months of supply, which is within the normal range. The slight over-supply of townhome inventory that existed in previous quarters has now been remedied.
“Maryland is within reach of our forecast of a modest 5% increase in new home demand this year,” said Sage. “Local builder sentiment is rather positive, more so than would be indicated by starts and closings. The housing market is on solid footing with good job growth, a healthy, and improving, resale market, and low unemployment. These should contribute to further expansion of the new-home market next year.”
About Metrostudy
Metrostudy is the leading provider of primary and secondary market information to the housing and related industries nationwide. Metrostudy provides research, data, analytics and consulting services to help builders, developers, lenders, suppliers, retailers, utilities and others make investment and business decisions every day. For more information, visit www.metrostudy.com
About Hanley Wood
Hanley Wood, LLC is the premier information, media, event, and strategic marketing services company serving the residential, commercial design and construction industries. Utilizing the largest editorial- and analytics-driven construction market database, the company produces powerful market data and insights; award-winning publications, newsletters and websites; marquee trade shows and executive events; and strategic marketing solutions. To learn more, visit hanleywood.com.
