Monday, April 06, 2015

Sharp drop in D-FW home starts means less choice for buyers

North Texas home starts dropped by more than 20 percent in the first quarter from a year ago. (Steve Brown)
North Texas home starts dropped by more than 20 percent in the first quarter from a year ago. (Steve Brown)
A sharp drop in first quarter housing starts has dimmed hopes of easing the Dallas-Fort Worth housing crunch.
Builders cut back in home starts by more than 20 percent in the first three months of 2015 – a period when residential firms usually ramp up construction to have inventory for the spring and summer market.
But the number of home starts fell from the same period last year, according to new data from Residential Strategies Inc.
Dallas-Fort Worth homebuilders started just 5,740 houses during the first three months of 2015. That’s down more than 22 percent from home starts in the first quarter of 2014.
And it was the lowest number of quarterly home starts in the area in more than a year.
“As we suspected, the very wet weather we experienced this Spring slowed our start rate,” said Residential Strategies principal Ted Wilson. “If the weather cooperates over the next three months, I think we will have a huge second quarter.”
Even so, it could be hard for builders to catch up with demand because of continued constraints on available building sites, construction laborers and long lead times necessary to start new residential communities.
“I’m surprised that the first quarter starts were down, for whatever reason,” said Dr. James Gaines, economist with the Real Estate Center at Texas A&M University. “They will have a hard time catching up.
“You are going to have another year of very tight housing inventory in North Texas.”
Supplies of homes for sale in the D-FW area are at historic lows. There’s only about a 2-month supply of preowned houses listed for sale.
And the supply of finished new houses is even smaller – only 1.7 months, according to Residential Strategies.
With thousands of workers moving to North Texas to fill new jobs, there’s a scramble on for homes.
So far there’s no sign that homebuilders will be able to balance a market that’s been suffering from lack of supply since the end of the recession.
“The market is still out of balance,” Gaines said. “The demand is still far exceeding the supply.”
Builders sold 4,785 new D-FW homes in the first quarter– about 5 percent more than in the same period in 2014.
Sales would have been higher if there were new houses to sell. At the end of March, there were only about 3,100 completed new houses available in North Texas.
“Sales reports from the builders indicate that homebuying activity has been robust,” Wilson said. “In fact, the Spring market that typically kicks off after the Super Bowl, began earlier this year and has remained strong throughout the quarter.”
Prices of new homes have risen by 5 percent a year to a median of $284,585, according to Residential Strategies.
“The lack of existing home inventory means that the consumer has very few options today in the market place,” Wilson said. “With the strong influx of relocation buyers anticipated to appear in D-FW over the next two years, we expect this trend to continue.”
Steve Brown, The Dallas Morning News