September 1, 2024
Originally published via Builder and Developer
Master-planned communities (MPCs) continue to excel, maintaining nearly the same sales pace as the first half of 2023
The best-performing MPCs are developed with a strong vision and plan that guides development and unifies the community with appropriately targeted new housing; parks, trails and open spaces; distinctive signage; entry features; landscaping; and architectural design standards. MPCs distinguish themselves by fostering a “lifestyle” that encourages interaction among neighbors and embodies a true sense of community. These communities create environments where new home buyers believe they will lead better lives due to the housing, features and amenities, aesthetics, and other important attributes. Often, this includes parks, open spaces, schools, neighborhood shopping, services, and easy access to employment.
Each Summer and Winter RCLCO conducts a national survey to identify each state’s top-selling master-planned communities (MPCs). The survey provides insights into the performance of MPCs relative to the broader market and helps identify the factors that enable MPCs to achieve higher annual sales and premium prices compared to typical new home subdivisions.
New home sales are currently below 2023 levels, though the top 50 master-planned communities nearly match last year’s pace through the first half of 2024. New home sales among the top 50 communities are only 0.3% lower than midyear 2023, while the broader new home market nationally is down 1.1 % compared to last year. The latest sales data from the U.S. Census Bureau indicated a more substantial drop for June, which saw 7.4% fewer sales than the previous year.
Sarasota, Florida’s Lakewood Ranch claims the top spot among all-ages communities with 1,238 sales, a 1% increase over last year, while The Villages, an active adult community in Central Florida, is again the top-selling community in the country with an estimated 1,515 sales primarily to 55+ buyers. Sunterra, located in Houston, Texas, earned third place with a 16% increase in sales compared to the first half of 2023. Metro Development Group’s Mirada community in San Antonio, Florida, experienced a 60% increase in sales through the first half of the year, ranking the community within the Top 10 for the first time. Houston, Texas remains the top-performing metropolitan area, with 13 communities in the Top 50, representing over 4,500 sales.
“MPCs often perform better than the overall market during uncertain economic times, increasing their share of the market.”
The Las Vegas, Nevada metropolitan area follows with over 2,000 sales, representing 11% of sales among ranked MPCs. Notable performances in 2024 include Lennar’s Summer’s Corner in Charleston, South Carolina, which saw a 67% increase in sales, placing the community 7th in the nation after finishing 25th in 2023.
As of mid-2024, sales among the 50 top-selling MPCs maintained a pace similar to that set by the top-selling communities in the first half of 2023. This stability underscores the continued appeal and resilience of MPCs in a real estate market constrained by elevated interest rates. MPCs often perform better than the overall market during uncertain economic times, increasing their share of the market.
New single-family permit activity has been about 14.7% stronger through the first half of 2024 compared to the same period last year. Since permits typically act as a leading indicator of new home production, this year-over-year increase supports a more optimistic forecast for overall new home volume in 2024, particularly if the Fed cuts interest rates in September as anticipated.
Despite increased permitting activity, declines in home sales and elevated mortgage rates have led builders to adjust pricing strategies to bolster sales. According to NAHB’s July survey, 31% of builders reduced prices in July, up from 29% in June and 25% in May. The willingness among builders to adjust prices coupled with the introduction of smaller and more affordably priced homes has resulted in a lower median new home sales price in June 2024 compared to June 2023.
The current 30-year fixed mortgage rate is around 6.8%, above the five-year average of 4.7% but below the long-term average of 7.7%. The Federal Reserve’s potential interest rate cut in September 2024 could lead to a decrease in mortgage rates. The actual effect on mortgage rates will depend on market interpretations and other prevailing economic factors.
Overall, the mid-year 2024 real estate market presents a mixed picture. While sales among top-selling MPCs have been robust, the new single-family home market faces challenges. However, increased permit activity and the potential for lower rates in the fourth quarter indicate reasons for optimism about the market’s direction.
Disclaimer: Reasonable efforts have been made to ensure that the data contained in this Advisory reflect accurate and timely information, and the data is believed to be reliable and comprehensive. The Advisory is based on estimates, assumptions, and other information developed by RCLCO from its independent research effort and general knowledge of the industry. This Advisory contains opinions that represent our view of reasonable expectations at this particular time, but our opinions are not offered as predictions or assurances that particular events will occur.
