Phoenix-area homebuilding jumps 57% from 2023’s slow pace

Article originally posted on AZ Central on July 2, 2024

Homebuilding across metro Phoenix has jumped from last year’s tepid pace, despite higher interest rates.

Permits to build new houses are up almost 57% through May, compared to the same five months in 2023, according to housing research firm RL Brown Reports.

Despite higher demand, new house prices in the Phoenix area are basically flat. The median new home costs about $475,000 in May, up less than 1% from May 2023.

“The new home market is a bright spot in Phoenix housing now,” said Jim Daniel, president of RL Brown Reports.

Higher interest rates are impacting the homebuilding market too. But builders have been able to offer buyers mortgage-rate buydowns, and that’s helping with sales.

The southwest Valley, with some of the most affordable new house prices, dominates the building market. Almost 700 new homes were permitted in the area home to Buckeye, Goodyear and Litchfield Park during May.

The northwest Valley was second with about 525 homebuilding permits. And the southeast Valley, which includes Mesa, Gilbert and Queen Creek, was third with almost 260 new home permits in May.

Roosevelt Park in Avondale was the most popular community with buyers in May with 27 new home sales. Avion at Ballpark Village in Goodyear ranked No. 2 with 25 sales, and Sun City Festival in Buckeye was third with 20 new home sales in May.

New home permits, sales and top builders in May 2024

Through May, there were 11,775 homebuilding permits issued in metro Phoenix. That compares to 7,511 for the first five months of 2023.

New home sales totaled 9,522 during the first five months of the year, up about 3% from 9,257 for the same timeframe in 2023.

Lennar Homes was the top builder in May with 224 home permits in the Phoenix area. Meritage Homes was second with 217, and D.R. Horton was No. 3 with 217 new home permits.

Metro Phoenix’s homebuilding market has not rebounded from the records it hit during the boom of 2004-06 when about 50,000 permits were issued annually, but the growing population and housing shortage are driving increases in homebuilding this year.