MarketNsight recently released the final 2020 numbers for Atlanta housing in addition to making 2021 predictions. Data shows that for all 2020, Atlanta new home pending sales were up 22% and 2020 new home closings were up 6% over the previous year.
It is interesting to note the relationship between pending sales in Atlanta housing and COVID-19 (coronavirus) cases in Georgia. After a dip during the shelter-in-place orders, pending sales went positive the fourth week of April and new pending sales were up 32% year-to-year (from April through December). Since turning positive for the year, the low point coincided with the election in the first week of November.
New pending sales were positive year-to-year a total of 41 weeks and negative year-to-year a total of seven weeks. Of those seven negative weeks, six coincided with the government shutdown – the second week of March through the third week of April.
“Closings year-to-year peaked at +30% in July,” MarketNsight and ViaSearch President John Hunt said. “New pending sales year-to-year peaked in August at +44%. Closings usually follow pending sales, but the opposite happened during the last two quarters of 2020, and this reflects a lack of supply rather than a drop in demand.
“The good news is that permits in the last half of 2020 hit records not seen since 2007, and November permits were the highest since November of 2006.”
The permit 12-month moving average was relatively flat since 2019 until turning positive in August of 2020. The pandemic caused a steep drop in the year-to-date and year-to-year percent changes, but since bottoming in May at -14%, it has improved steadily.
As of November, permits were 6% ahead of the same period for 2019. November’s permits were a robust 50% above November 2019. Once December permits numbers are recorded, 2020 should finish up between 10% to 12% over the previous year.
MarketNsight predicts permits will be up between 15 and 20% this year. Keep in mind every city within a 250-mile radius of Atlanta already experienced at least a 20% increase in permits over 2019.
“The recent sharp increase in permits should help alleviate the supply shortage somewhat, and we believe closings could be up 10% or more for 2021,” Hunt said.
The current environment of ultra-low interest rates and near-zero inventory is going to be here for the future. As the rest of the economy finally begins to see improvement, rates will rise, but MarketNsight expects the 30-year fixed will stay at or below 4%. These factors continue to present opportunities to fill pent-up demand with new homes, provided homes can be put on the ground at the right price. If rates were to go above 4%, as they did in 2018, it could have a dampening effect on housing demand.
MarketNsight is focused on helping home builders and developers make smart decisions related to purchasing land and pricing product. Its groundbreaking Feasibility Matrix® systemizes the decision-making process and creates a one-stop-shop for gauging new home community feasibility including ranking by builder and subdivision and developed lot and raw land sales.
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