Dallas and Houston metro areas had the most new-home settlements in 2020
The construction of new homes is important to meet the shelter needs of America’s expanding population. CoreLogic public records data show that closings on single-family new-home sales were up 12% year-over-year in the six months before the pandemic hit. The pandemic derailed closings last spring, but only temporarily. [Figure 1] Completions of one-family homes rebounded by summer, remained brisk the rest of 2020, and were the highest annual total since 2007.
The largest numbers of new home sales were in large metros in the South and the West, in markets that have had large population gains. [Figure 2] The Dallas and Houston metros top the chart in the most recent 12-month period with more than 30,000 new home settlements. Phoenix and Atlanta each had more than 20,000 new-home closings. We identified 13 markets that had at least 10,000 new home sales in the past year, and all were in the South or the West.
The metros that had the largest annual percentage growth in new home sales were smaller markets in the South and West. [Figure 3] Of the 10 fastest growing new sales markets, five were metros in Texas, Florida, or Arizona, the three states with the largest population gains last year.[1] And each of these metros had sales increase by more than 25% in the past year.
Because new homes have the latest amenities and tend to be larger than older homes, they generally have a higher price tag. We took CoreLogic sales data by metro and evenly divided sales into three price groups: entry-level, mid-level, and premium. [Figure 4] Across all metro areas, we found that new homes comprised about 6% of entry-level sales and about 19% of high-end sales. New homes typically added less entry-level supply in high-cost places, like California, than in lower-cost markets.
Real estate agents, home builders, and mortgage lenders should prepare for further increases in new home sales in 2021. And we expect the biggest sales gains in places with high population growth, projected to be Texas, Florida and Arizona.
Summary:
- Pandemic temporarily derailed new-home sales last spring.
- Dallas and Houston metros had the most new-home closings in 2020: more than 30,000 each
- Texas, Florida and Arizona had the largest net population gain in 2020 and had 5 of the 10 fastest growing new-home markets.
- New homes were 19% of high-end sales and 6% of entry-level sales in 2020
Note: Thom Malone created the tabulations for the exhibits.
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[1] The U.S. Census Bureau has estimated that the U.S. population increased 1.2 million between July 1, 2019 and July 1, 2020. By state, Texas (374K), Florida (241K) and Arizona (130K) had the largest population gains.
