Gilbert is the most popular place in the Valley to buy a new home, with more than twice as many houses sold there in March than any other city in the metro area.
Buyers snapped up 167 homes last month in the town, compared with the next-best performance of 65 houses in Phoenix.
And Gilbert’s neighbors also showed strong activity, according to a report released Thursday by the W.P. Carey School of Business at Arizona State University. It found 55 new homes were sold in Chandler, 42 in Mesa and 40 in San Tan Valley.
“The south East Valley is definitely the highlight for new home builders,” study author Mike Orr said.
Gilbert shares one other bright spot in the most recent look at the recovering single-family home market. The town’s new home sales exceeded the number of distressed sales or foreclosures. That wasn’t the case in any other Valley city. Orr said he was surprised at the finding because that hasn’t been the case for Gilbert at least since the foreclosure crisis was enveloping the Valley by 2008.
Gilbert’s improving housing picture also reflects a dramatic fall in foreclosures across the Valley.
The number of foreclosures in March fell 60 percent compared with March 2011. In other year-over-year improvements, median home prices rose 20.4 percent and new home sales shot up 35 percent.
Median home prices now stand at $134,900, up from $112,000 a year ago. The study area includes Maricopa and Pinal counties.
Prices are rising because the number of homes for sale has fallen sharply. Less than 22,000 homes were listed in March, down 41 percent from the previous year. And just 9,600 of those houses don’t have a contract on them, which puts the housing supply near record lows.
The shortage will continue to affect values.
“It will be a long time before it stops prices from going up,” he said. “At the moment, there’s an awful lot of stress on the market because there’s such strong demand.”
Buyers are increasingly frustrated because they usually compete with multiple bidders and have to pay more than asking price, he said. Some are choosing to buy a new home instead to avoid the hassle of the frenzied competition. The market is hottest for homes priced less than $250,000.
The tight supply of homes has limited the number of sales. March transactions fell 9 percent compared with a year ago, Orr said.
Home builders are ramping up construction to meet demand but they can’t up production like they did during the boom because so many builders went out of business and many construction workers have left the area, Orr said.
“They are responding as best they can,” he said. “This isn’t a surprise to them. They thought it would come back.”