Metro-area homebuilders closed 1,457 sales in the third quarter, down 40 percent compared with the same period last year, according to a report released Tuesday.
“The 40 percent doesn’t really jump out as a particularly good or bad number,” said Jeff Thredgold, an economist for Vectra Bank Colorado. “If you’re a homebuilder, it’s a terrible number, but versus what’s going on around the country, it’s a reasonable number.”
The median minimum price for all new homes rose a meager 1 percent, to $310,990, with condominiums declining 11.5 percent, to $230,000, according to the report by Hanley Wood Market Intelligence, a provider of analytical data to the homebuilding industry. The median minimum price is the lowest price available for a particular plan offered by a builder and does not include options, upgrades or incentives.
The median minimum price for new single-family homes rose 4.4 percent, to $354,950.
“That’s somewhat of a function of a more limited supply of new homes, especially on the detached side,” said Matt Osborn, senior vice president of homebuilding for Village Homes. “The new supply is under three months right now. It’s within the historical average for where that supply should be.”
Thredgold said that when the market is weak, single-family homes outperform condos.
Jeff Willis, executive vice president of land acquisition and development for Berkeley Homes, said the homebuilding industry has worked through the standing inventory without starting construction on many more homes.
“If you match up the closings to the starts, both numbers have come down dramatically,” Willis said. “We’re not seeing a lot of new-home standing inventory in the market.”
The number of residential building permits issued this year has declined 35.5 percent, to 6,871, compared with this time in 2007, according to the Home Builders Association of Metro Denver. But before the housing market recovers, credit markets must firm up, Willis said.
“There is concern on buyers’ part about their ability to get a mortgage,” he said. “We have to get buyer confidence up. I do think there’s pent-up demand out there. I just think everybody’s nervous.”
Builders had hoped that seller-financed down-payment assistance, part of the housing-recovery bill, would spur prospective buyers to sign contracts before the incentive expired last month. While some buyers did take advantage of the incentive, builder optimism on the strength of the incentive does not seem to have played out, according to Hanley Wood.
