Rio Grande Valley 2Q15: The Recovery Continues – Job Growth will be Key to Future Market Strength

• The Annual Starts rate through 2Q15 stands at 1,745, down 2% from 2Q14
• New Home Inventory Continues to Decline and is at the lowest level in a decade
• The recovery continues in the Rio Grande Valley and job growth will be the most important factor as to how much this market can improve over the next few years

AUGUST 2015 – Metrostudy’s 2Q15 drive survey of new home construction in the Rio Grande Valley shows an annual rate of 1,745 starts, down 2% from the 2Q14 rate of 1,788. There were 486 starts and 486 closings in the Rio Grande Valley in 2Q15. The annual rate of new home closings currently stands at 1,917, up 7% from a year ago.

“Metrostudy’s 2Q15 analysis found the level of new home inventory continued to decline and is now resting at its lowest level in about a decade,” said Jack Inselmann, Director of Metrostudy’s Rio Grande Valley region. There were a total of 1,117 homes in inventory (Models, Finished Vacant and Under Construction) at the end of 2Q15, which represents a 7.0 months of supply based on the annual closings rate of 1,917.

In the 2nd quarter of 2015 Metrostudy counted 13,686 vacant developed lots in the Rio Grande Valley market. Based on the current annual starts rate of 1,745, this lot total represents a 94.1 months of supply of lots, well above what is considered a healthy range.

It is important to note that the Top 57 most active subdivisions ranked by annual starts [8+ annual starts] ave 3,012 developed lots, a 34.4 months of supply. This is a much healthier level by far when compared to the overall 94.1 months supply. This is important as it supports the discussion of a small group of active subdivisions and large group of fairly inactive subdivisions. The Top Subs group has a starts rate of 1,051 and annual closings of 951.

“The recovery continues in the Rio Grande Valley and job growth will be the most important factor as to how much this market can improve over the next few years,” said Inselmann. “The market has come a long way in the last couple of years and even though it still has a ways to go the progress so far is notable.”