The Top-Selling Master-Planned Communities of Mid-Year 2023

Every year since 1994, RCLCO has conducted a national survey identifying the top-selling master-planned communities (MPCs) through a rigorous search of high-performing communities in each state. Each year we report the annual sales among the Top-50 communities at the end of the year, as well as publish this mid-year update in July. For this mid-year 2023 report, we have surveyed MPCs throughout the country to establish the current rankings as an update to our The Top-Selling Master-Planned Communities of 2022 published in January 2023.

The chart above summarizes RCLCO’s list of the 50 top-selling communities through the first half of 2023, including a comparison with their home sales through the first half of 2022. The Villages, an active adult community in Central Florida, is once again the top-selling community in the country with an estimated 1,960 sales. Sarasota, Florida’s Lakewood Ranch claims the top spot among all-ages communities with 1,227 sales, a 20% increase over last year. Sunterra, located in Houston, Texas, earned the third-place rank with a 49% increase in sales after finishing within the Top-10 for the first-time last year.

Sales among the Top-50 communities of Mid-Year 2023 increased by 9% compared to the pace set in the first half of 2022, with a majority of MPC developers optimistic about the second half of the year. Master-Planned Communities have maintained their strong appeal for consumers despite concerns about a possible recession and elevated interest rates. The supply chain issues and limited inventories that caused a significant decline in sales in 2022 may not be fully behind us yet, however they have had much less impact in the early months of 2023. To further understand how communities view their trajectory for the remainder of the year, developers and MPC representatives were also asked as part of this Mid-Year survey to rate their outlook for 2023 on a scale of 1 to 5 (with 5 being the most optimistic, and 1 being the most pessimistic). Within this survey, 56% of respondents cited strong optimism (4 or 5) for the sales pace likely to be set in the second half of the year. Less than 12% of respondents signaled concern for a weaker second half of the year.

Top-Selling Master-Planned Communities of Mid-Year 2023

The most recent pace of MPC sales represents a turnaround since our last survey six months ago. In our Year-End 2022 issue of RCLCO’s Top-Selling Master-Planned Communities Report, we reported that sales among Top-Selling communities had declined by 20% compared to the pace set in 2021, but some of that decline has since been recovered. Despite interest rates remaining elevated along with new home prices, sales within the Top-Selling Master-Planned Communities increased by 9% in the first half of 2023 compared to the pace set in 2022. Although some builders have pulled back on incentives, about 60% are still using incentives to stimulate new home sales.

The pace of existing single-family home sales remains slow, and inventories remain low, which can act as a positive influence for new home sales. The pace of existing single-family home sales began to slow in early 2022 as interest rates jumped but trended back up slightly as interest rates declined over the first half of 2023. Now that 30-year fixed rates are back around 7% and are likely to remain higher for longer than had been expected, potential new homeowners still waiting on the sidelines for rates to drop further may not see enough change to re-engage before early 2024. Many existing homeowners have mortgages below 6%, creating a disincentive to buy a new home. Fed Chairman Powell has signaled more interest rate hikes still to come in 2023. Forecasts suggest mortgage rates in the 6% range or slightly lower by early 2024.

New home completions through the first half of 2023 have been markedly higher compared to the first half of 2022, with recently released estimates for June showing a 5.5% seasonally adjusted year-over-year increase. New permit activity as of June 2023 is about 15% lower on a seasonally adjusted annual basis compared to the previous year. Given that permits typically act as a leading indicator of new home production, this year-over-year and month-over-month decline could suggest a more modest forecast for overall new home volume in 2023. However, as a “safe haven” for consumers when markets slow, the outlook for Master-Planned Communities specifically may be viewed with more optimism.

New home prices remain high but have moderated some, at an average of $487,300 nationally in May 2023, a 7% decline compared to May 2022 pricing. Stronger new home sales typically correspond with improved new home inventories, and with a better inventory profile among the top-selling master-planned communities. New home sizes tend to go up and up during economic expansions, but when the market slows, the introduction of smaller homes and more attainably priced homes can help to maintain the pace of sales within master-planned communities and is a contributing factor to the ability of MPCs to outperform the broader new home market. For example, top-selling Lakewood Ranch cites the introduction of new entry-level inventory as a key component of its 20% increase in sales through the first half of 2023.

Market Outlook: Optimism for a Strong 2023

The long-term outlook for new for-sale housing remains strong, particularly for Master-Planned Communities. Demographic tailwinds are helping to drive demand, as millennial-aged or younger households make up half of the US population and represent the largest share of home purchasers. To better understand how MPC developers view their trajectory for future home sales, RCLCO asked top-selling community representatives and executives to rate their outlook for the remainder of 2023 on a scale of 1 to 5 (with 5 being the most optimistic, and 1 being the most pessimistic), 56% of respondents cited strong optimism (4 or 5) for the sales pace likely to be set by MPCs in the second half of the year. Less than 12% of respondents signaled concern for a weaker second half. Those respondents cited community-specific concerns around available inventory, rather than broader struggles with structural housing demand. This viewpoint also aligns with Homebuilder sentiment, as tracked by the National Association of Homebuilders (NAHB) Market index as shown below.

Market optimism among homebuilders has reached its highest level since July 2022. It reached its lowest point in December 2022 and has been steadily increasing in the months since. Furthermore, the underlying demographic trends supporting long-term new housing demand suggests continued growth in the single-family housing market over the long-term, despite the potential for near-term disruptions given fears of a possible recession. Master-Planned Communities, for which there is more underlying demand than supply, appear to have a positive trajectory for the remainder of the year, though the potential for a Federal Reserve induced recession is still a threat to the market. Longer term, MPCs will continue to benefit from strong underlying housing demand across price ranges. That said, the moderate priced end of the housing market remains a shadow of its former self, and MPCs have historically been the places where more creative housing options such as smaller homes at higher densities have been successful. The degree to which a broader range of housing may be offered within MPC developments will continue to impact their total sales and market shares.

The ranking of Mid-Year 2023’s 50 Top-Selling Communities is based on total net new home sales as reported by each individual community. Preliminary sales numbers were provided by communities in mid-June and pro-rated in order to arrive at estimated mid-year sales, with final sales figures provided during the first weeks of July, and in some cases being updated periodically throughout the month. To be included in our ranking, MPCs must have a number of features. True MPCs are developed from a comprehensive plan by a master developer, and incorporate a variety of housing types, sizes, and prices, with shared common space, amenities, and a vital public realm. The best examples of MPCs are developed with a strong vision and comprehensive plan that guide development and unify the community through distinctive signage, wayfinding, entry features, landscaping, and architectural/design standards. Beyond the built environment, MPCs differentiate themselves from typical suburban subdivisions in that they provide a means for interaction among neighbors in the sense of the word “community.” They foster an environment within which generations can live better in terms of housing and the community environment, and many offer educational opportunities, neighborhood shopping and services, and even employment centers to complement the residential neighborhoods. Although rooted in a vision, the most resilient MPCs have flexible master plans that are environmentally sensitive, market responsive, and nurture the lifestyles of their residents.

Given the above criteria, we do not include the collective sales of multiple, separate communities that are unified only through marketing efforts rather than a preconceived community vision, nor do we include communities that are a collection of subdivisions that have few unifying elements other than consistent signage and name.

Article and research prepared by Gregg Logan, Managing Director, and Karl Pischke, Principal. Additional research support was provided by Kim Asbell, Shanren Brienan, Maggie Henderson, and Jameson Logan.

RCLCO provides real estate economics and market research services, strategic planning, and management consulting to real estate developers, investors, financial institutions, home builders, public agencies, and anchor institutions. Client’s turn to us for trusted, unbiased third party recommendations regarding highest and best use, product definition, market positioning/pricing, and absorption potential for any proposed development concept, site, or product type. Interested in learning more about RCLCO’s Master-Planned Community Services? Please visit us at www.rclco.com/master-planned-communities-services/.

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.