VOL. 128 | NO. 223 | Thursday, November 14, 2013
Shelby County Homebuilding Slows in October
By Amos Maki
(Daily News File/Lance Murphey)
Shelby County homebuilding activity cooled in October, with builders filing fewer permits and selling fewer new homes compared to October 2012.
Homebuilders pulled 54 permits in October, down 38.6 percent from 88 permits filed in October 2012, according to real estate information company Chandler Reports, www.chandlerreports.com.
The average permit in October measured 3,310 square feet and $280,627, compared to 3,369 square feet and $248,288 in October 2012.
The 54 permits pulled in October was up 5.5 percent from 51 permits in September. The September permits averaged 3,465 square feet and $270,425.
Year to date, builders have filed 745 permits, which is down 5.7 percent from 790 for the same 10-month period in 2012.
Don Caylor, president of the West Tennessee Home Builders Association, said building activity typically slows after school begins but that builders are being cautious about supply because of a dwindling number of available lots and uncertainty over the economy.
“I think if you take all of that and mix it in a bag, that’s why we’re crawling along,” Caylor said. “We’ve seen an increase in rates, uncertainty over the economy and our government, and we have a limited number of lots, and that certainly plays a part in how many homes are being built.
“It doesn’t surprise me. Everybody has had a pretty good year, and I don’t think anybody’s trying to push the envelope.”
Homebuilders didn’t sell as many homes in October as they did during the same month a year ago.
Builders sold 52 new homes in October, down 38.1 percent from 84 new homes sold in October 2012 and down 13.3 percent from 60 sold in September. The average sales price of homes sold by builders was $259,127, up 2.3 percent from $253,182 in October 2012.
Regency Homebuilders LLC was the top builder as tracked by permits in October, with 14 averaging 2,850 square feet and $218,364. Regency was followed by Kevin Hyneman (four; 3,281; $115,375) and Grant Homes (three; 2,739; $789,505).
Regency Homebuilders led the way in sales, with 12 averaging $248,301. Charles Morgan of Vintage Homes sold eight homes averaging $148,919, and Karen Garner of Magnolia Homes sold four homes averaging $403,852.
The Walker Farms subdivision in the 38002 ZIP code saw the most activity in October, with four permits averaging 2,342 square feet and $189,276. The Enclave was second, with three permits averaging 5,464 square feet and $397,089. The Ashton Station subdivision also saw three permits, averaging 2,713 square feet.
The 38002 ZIP code (Arlington/Lakeland) led the way in permits, with 20 averaging 3,231 square feet and $347,056. Collierville’s 38017 had six permits, averaging 3,714 square feet and $322,333. The 38125 ZIP code in Southeast Shelby County also had six permits, with those averaging 2,734 square feet and $147,153.
Caylor said the shortage of developed lots is a major concern for builders, who are carefully measuring how many new homes are brought into the market.
According to MarketGraphics, the current lot inventory in the Memphis market – which includes Shelby, Tipton and Fayette counties in Tennessee, Crittenden County in Arkansas and DeSoto County in Mississippi – is 13,543.
But the total market demand for lots from 2013 to 2018 is 22,530. Of that number, 11,187 lots will be needed in Shelby County alone. To keep pace with demand, 22,962 lots will need to be developed before the end of 2018.
Caylor said that while some builders may want to deliver more new homes, the poor nature of the market over the last five years and uncertainty over available lots means builders are going to remain very cautious when it comes to building new homes on the lots they do have.
“People are watching inventory, and a lot of people don’t want to take risks because we’ve come through a terrible five years,” Caylor said.
Chandler Reports is a division of The Daily News Publishing Co.