This year’s busy start for home sales in the region – the busiest in three years, according to a recent report – can be attributed in part to an increase in sales of pre-owned homes, an analysis by a local research firm reveals.
While sales of new homes in the first quarter of this year were nearly the same as the first quarter of 2014, pre-owned home sales jumped 18 percent in the eight jurisdictions that were included in the analysis, conducted by Integra Realty Resources-Richmond.
Of 2,959 closings in those eight jurisdictions during the first three months of the year, 2,463, or about 83 percent, were pre-owned homes, and 496 were newly constructed homes.
Those numbers are up from the same period in 2014, when 80 percent of the 2,576 total sales were of pre-owned homes.
The numbers shed more light on a report released this spring by the Central Virginia Regional Multiple Listing Service. That report said the first three months of this year proved to be the busiest opening quarter the region has seen since third quarter 2013.
The CVRMLS study covered 16 jurisdictions – double the area of Integra’s analysis, which included Caroline, Chesterfield, Goochland, Hanover, Henrico, New Kent and Powhatan counties and the city of Richmond.
But both sets of numbers reflect a similar trend in total home sales, which increased nearly 15 percent in Integra’s analysis and 17 percent in the CVRMLS study. The larger-area study tallied a first-quarter total of 3,089 home sales across the 16 jurisdictions.
Tom Tyler, director of housing markets at Integra’s Richmond office, conducted the study and compiled his statistics with data from Integra, Metropolitan Regional Information Systems and the CVRMLS.
Tyler said an increase in permitting and lot sales in the first quarter should translate to an increase in new home sales the rest of this year.
“2014 was down a little bit, and now I think it’s starting to come back up,” Tyler said. “I think we are looking for continued improvement in both the new homes and pre-owned segment, but I think that we fell so far between 2005 and 2011, it’s not going to be a straight shot up.
“There are going to be periods of declining activity, but I think overall it’s still going to trend upward.”
Of the eight jurisdictions analyzed by Integra, only Powhatan saw a drop in the number of pre-owned home closings in the first quarter of 2015 compared to last year – a 9 percent change. Caroline saw the biggest increase with 39 percent.
Pre-owned home sales increased in New Kent by 38 percent; Henrico by 33 percent; and Goochland by 25 percent. Chesterfield saw a 16 percent increase; Hanover, 9 percent; and Richmond, 6 percent.
Integra found new home closings were more mixed among the localities, with Hanover, Henrico and Caroline seeing decreases – 19, 14 and 11 percent, respectively. New Kent, Richmond and Goochland saw the largest percentage increases, at 40, 35 and 25 percent, respectively.
Of the 2,463 pre-owned home closings in the first quarter, the average sale price was $227,886, compared to $372,831 for the 496 new home sales. Goochland led the pack in each category, with an average pre-owned sales price of $379,472 and an average new home price of $454,568.
While the numbers show an increase in pre-owned home sales, they’re also consistent with recent trends in new home construction in the region.
Annual lists compiled by Richmond BizSense show a decrease in the number of homes built last year, compared to those built in 2013. The top eight builders for those years reported a total of 1,570 homes built in 2014, compared to 1,636 homes in 2013 – a decrease of 4 percent.
Tyler attributed the differences in numbers between new home sales and pre-owned closings to current inventory.
“When the market did falter, a lot of developments just stopped, and they had to go through getting some of the new home inventory out. But I think there’s probably a lower supply of new homes now than there were a few years ago,” Tyler said. “So development activity has increased since 2013, and I think it’s going to continue to increase.”