North Texas housing starts and new home sales surged in the first quarter of the year.
But most of those gains came before the COVID-19 pandemic shut down the area’s economy.
Dallas-Fort Worth homebuilders started 10,581 single-family homes in the first three months of 2020 — a 25% jump from the same period last year.
“The first 10 weeks of 2020, before the coronavirus disruption hit D-FW, were exceptionally strong for area builders,” Ted Wilson, principal with Residential Strategies Inc., said in the new report. “Driven by ultra-low mortgage rates, builders reported robust traffic and sales.
“This is the first time since 2006 that builders have been able to generate over 10,000 starts in a single quarter.”
New home sales during the quarter rose almost 16% year over year, with 9,370 houses changing hands.
The first-quarter start and sales numbers likely represent the peak of the local building market.
“Obviously, the world changed in mid-March” Wilson said. “With the shelter-in-place requirements that were issued with the spread of the coronavirus, builders reported that prospective buyer traffic declined in the following weeks.
“Nonetheless, while sales for most builders declined to levels that were 30% to 40% of the pace experience of February, they have remained positive, especially at the price points under $300,000.
“It’s mainly at the lower price points we see the most action today.”
At the end of the March, there were 17,402 houses under construction in the D-FW area, Residential Strategies found. And there were about 7,274 finished vacant houses on the market.
With layoffs and employee furloughs, builders are worried that some buyers who previously signed contracts to buy a house may bail out of the deals.
“Builders are scrubbing their backlogs to detect potential cancellations,” Wilson said. “Everybody is concerned about what later in the summer will feel like.
“They don’t want to have too much finished inventory on the ground.”
Wilson says home construction will likely decline in the months ahead.
“The second quarter will still have a fair number of starts,” he said. ”What will be absent will be the speculative starts — everybody tapped the brakes on those.”
So far D-FW builders haven’t seen widespread issues of worker shortages because of the pandemic, Wilson said.
“They are generally showing up,” he said. “Obviously there are guidelines they have to adhere to — they are limiting how many workers are in the unit at a time and they have to practice social distancing.”
The strong new home numbers for the first quarter mirror data for the local home resale market.
With mortgage rates near record lows, there was an uptick in home purchases during the first two months of the year.
North Texas real estate agents sold 9,316 single-family homes in March — 4% more than in the same month in 2019.
But sales agents report a sharp decline in home shopping traffic and the number of preowned homes coming on the market is down from a year ago.
Open houses have been curtailed, and real estate agents are relying on virtual showings to promote properties.
“A lot of new home models are closed but by appointment only,” Wilson said. “Those builders that have a good online presence have been able to work through it.”
Written by Steven Brown from Dallas Morning News. Original article source: https://www.dallasnews.com/business/real-estate/2020/04/13/d-fw-home-starts-highest-in-14-years/?outputType=amp/