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Tuesday, Dec 6, 2022

New Home Expands Further Outside State

Irvine-based New Home Co. (NYSE: NWHM) is expanding its footprint in Arizona as the homebuilder looks to move down its average price point and grow outside California.

The company first entered the more affordable state for housing through land buys in 2016, and has been ramping up its presence since, specifically in the Phoenix market.

It will soon launch its first project in the city Mesa—just east of Phoenix—at the Eastmark master-planned community developed by Brookfield Residential and DMB Inc.

Construction is underway at Element at Eastmark, a 135 single-family community where sales are expected to start this summer.

Prices for the two-story homes will begin in the mid $300,000s, with sales marketed to first-time buyers and “those working from home,” the company said.

New Home reported 197 new home orders in Arizona last year, up nearly 600% year-over-year. The rest of its 2020 home orders, 619, were in California.

The builder, with a market cap around $105 million, this year announced plans to move into a third state, Colorado, via the $8.4 million acquisition of Denver’s Epic Homes.

Element at Eastmark 

Eastmark was the No. 15 master-planned community in the United States last year by home sales, with 786 sold last year according to Irvine’s John Burns Real Estate Consulting.

Homes in the new Element community will range in size from 1,559 square feet to 1,965 square feet.

The project joins three other New Home communities in Phoenix.

“We’ve been fortunate to acquire some special pieces of land in the Phoenix region and are pleased with our success here,” said New Home President and CEO Leonard Miller.

Lower Price Point 

New Home has been lowering its average selling prices in recent years, reporting a 17% drop in average selling price to $720,000 during the fourth quarter of  2020.

“The decrease in average selling price continues as we diversify and move down in price points in all our markets and especially in Arizona, where we delivered the first homes of our affordable communities during the quarter,” CFO John Stephens said during a recent earnings call.

The company forecasts its average selling price to be about $675,000 during the first quarter, “and then continue to decrease sequentially as we move down in price point through the balance of the year,” according to Stephens. 

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