D-FW Homebuilders Scramble to Start Houses
North Texas homebuilders put the pedal to the metal in the final months of 2020. Dallas-Fort Worth home starts were up by more than 50% in the fourth quarter as demand for housing caused a jump in purchases. Builders started 13,667 new homes in the last three months of 2020, according to Dallas-based housing analyst Residential Strategies. “It was a huge quarter,” said Residential Strategies’ principal Ted Wilson. “We are within about 3,000 starts of an all-time record.”
For all of 2020, builders started 47,919 homes — the highest construction volume for the area in more than a decade. “The housing market continues to be red hot,” Wilson said in the report. “Low mortgage rates, combined with the emergence of millennials entering their home buying years, has created a pitched level of demand.”
Area builders sold 10,968 homes during the fourth quarter, a 28.7% increase year-over-year.
Robust new home sales are continuing into the new year. “Entering 2021, North Texas builders are focused on getting houses built and replacing lots,” Wilson said. “They have very healthy levels of sales backlogs going into 2021.” Wilson said the recent surge in new home buys is fueled in part by a lack of existing homes for sale. Only about 9,000 preowned single-family homes were listed for sale with real estate agents in December — a more than 30-year low. “Because of the shelter-in-place mindset brought about by COVID, many households that normally would have listed their house for sale did not do so in 2020” Wilson said. “The drop in mortgage rates amped up housing demand and has reduced existing housing listings to record low levels.”
Many of the D-FW new home sales are to first-time buyers. “The decline in mortgage rates makes first-time homes much more affordable,” said Wilson. “Additionally, other renters that have been shut out of the for-sale market due to housing affordability concerns are now taking advantage of the low-rate environment.” Almost 40% of the home starts were houses priced below $300,000.
“Clearly that’s the strength of the market now,” Wilson said. “If you go to the outer ring of suburbs, that’s where they are really ramping up construction. That’s where a lot of the value housing growth is taking place,” he said. “There is the psychology of the market the acceptance of these far suburban locations because so many people can work from home now.”
New home shoppers won’t find a lot of finished housing immediately available. At the end of the year, Residential Strategies counted just 4,828 finished vacant new homes in the D-FW area, a 1.4-month supply. Wilson said a shortage of ready-to-go building sites and other factors will keep D-FW builders from substantially increasing construction activity. “You talk to the builders and they are facing constraints from so many angles,” Wilson said. “Labor is a challenge and getting people to show up...