D-FW Home Starts Sank Lower in the Second Quarter
North Texas homebuilders pulled back on construction in the second quarter.
Dallas-Fort Worth area builders started 8,925 homes in the traditionally busy buying season between April and June. That was a 10.6% decline in area home starts from second quarter 2018, according to new data from Dallas housing analyst Residential Strategies.
High home construction costs and sales prices are holding back the local housing market, even though the D-FW economy continues to boom.
"While job growth continues to fuel market demand, housing affordability remains a significant factor for many prospective buyers," Residential Strategies principal Ted Wilson said in the new report. "Builders are focused on managing their unsold housing inventory, and many have dialed back their starts to match sales activity." Wilson said most of the home construction cutback was in higher priced homes. "In the $250,000 to $350,000 price range starts are up slightly year over year," he said. "Above $350,000, starts are down."
Despite burgeoning demand for affordable new houses, local builders have had a hard time constructed lower-cost homes. "The developers cannot get cheap enough land and lots to get the house price down enough," Wilson said.
New home sales in the D-FW were relatively flat from a year ago with 9,049 houses occupied during the second quarter. Builders are often using price cuts and special offers to lure buyers.
"The summer months have been pretty good, but they concede they are having to discount quite a bit to get those sales," Wilson said. ""Builders are focused on managing their unsold housing inventory, and many have dialed back their starts to match sales activity. "The speculative starts are much smaller this year than we have seen in years past."
With the pull back in starts, Residential Strategies is forecasting that total home construction will be down this year - the first significant decline in D-FW building since the Great Depression.
"It's shaping up to be that way," Wilson said. "I was hopeful the lower rates would bring more buyers into the market. "We are into this ninth year in the housing cycle and we are somewhat long in the tooth," he said. "The rental market is where so many of our residents go because of the affordability issue."
Median new home prices in North Texas are near $350,000 - about 25% more than a mid priced preowned house.
The D-FW area led the country for home starts in 2018 with 34,750 houses construction. Houston was second, with 30,146 home starts. Home construction in North Texas is still almost 40% below where it was a decade ago...