North Texas Home Starts Boom As Builders Struggle to Meet Buyer Demand
North Texas builders scrambling to meet a flood of buyers have boosted home starts to the highest level in more than a decade.
Dallas-Fort Worth single-family home starts soared by more than 34% in the third quarter from a year earlier, rising in the face of the pandemic and recession. Builders started almost 13,000 local houses during the just-completed quarter, according to just-released data from Residential Strategies Inc. “Back when the pandemic hit, we were bracing for a pretty tough summer with all the job loss,” said Ted Wilson, principal of the Dallas-based housing consultant. "But everything opened up in May with strong sales and it has continued onward. It’s pretty amazing considering the backdrop of COVID.” Wilson said the third-quarter D-FW home starts were the strongest since mid-2006, before the Great Recession hit the housing markets.
Builders have started 43,246 North Texas homes in the year ending September — a more than a quarter increase in construction from the previous 12 months. D-FW home sales for the third quarter totaled more than 11,500 houses, a gain of about 21% from the same period last year. “You have several things that have come together to make this the perfect storm for housing,” Wilson said. "Most important is the drop in mortgage rates. And you have a wave of millennial buyers that builders have been expecting,” he said. “They have embraced the lower mortgage rates full-on.”
Wilson said the surge in building starts has put strain on the construction industry as builders race to start homes. “There have been a few builders that have gotten squeezed,” he said. "Lumber prices have jumped significantly. They are still going to make money on these houses, but the profit margins aren’t going to be as robust.”
Builders are also having a tougher time finding labor, affordable building sites and building materials. “Not only are the houses going up in price because of the materials, but you see lot prices up 10% or 15%,” Wilson said. “If prices continue to rise, it’s going to tend to negate some of the affordability advantages. It could slow the market down.”
The median new home price in D-FW was just under $319,000 in the third quarter, down almost $10,000 from a year ago.
But Wilson said that’s because builders are constructing more affordable homes. “We are selling more houses at the lower end so it’s brining the median price down,” he said. “The gap between existing home and new home prices is narrowing.”
In September, the median price for existing homes sold in North Texas was just under $300,000...