What's happening in new home sales - June 2023

The first quarter of 2023 created an opportunity for Phoenix-area Builders to correct inflated pricing due to momentum in the housing market. In addition, the completion of new homes, sold as completed units, raised competition further allowing for Buyers to take advantage of great values. Challenges imposed on the industry, due to supply chain shortages were also experiencing a great deal of relief. Thereby allowing for a record number of closings and available units that were ready to close this Spring.

Reports of long, extended, or extreme build-times were keeping buyers from considering the new home sector for fears of the unknown. Today, build times have compressed back to typical levels for most homebuilders due normalized levels of materials needed to complete new home projects. However, prices are continuing to climb at a pace that we last encountered pre-pandemic despite noticeable price reductions that took place during the first quarter.  Adding to the restoration of Buyer confidence, the sales pace (units sold/per month) has also returned to pre-pandemic levels.

Although design and home price incentives continue to be available, some builders are reducing incentives in lieu of price increases. Closing cost incentives continue to remain available and valuable as rates remain high, but recent reports show signs of these incentives declining as well. Keep in mind, rate locks are still available for up to 1 year (13 months in cases) with some builders, however there is typically a 1% rate lock premium imposed on Buyers.

Area Focus: Approval of SR30, which transits from the foot of the Estrella Mountains in Goodyear to Laveen and plans for extension from the existing 202 freeway through to the Durango curve in downtown Phoenix. Areas around Laveen, Tolleson, and Avondale, continue to remain strong prospects for new home buyers, particularly those still looking for values and shorter commute times. Most pricing starts in the mid to high $300’s to start in these areas. Development for infrastructure, shopping, and services remains strong with plenty of future plans for growth. As an example, areas nearby the Phoenix Raceway are expected to see a new entertainment venue with restaurants and shopping near the existing intersection of Southern and Avondale Blvd, due to large cash influx from NASCAR.

New home values inside Maricopa County remain strong and consistent, including outlying areas such as Maricopa and QueenCreek where plans for continued expansion proceed. Builders are always looking for more land to build upon, and that is mostly available only on the very outskirts of town.