By STEVE BROWN / The Dallas Morning News
Betting on a market rebound, Dallas-Fort Worth homebuilders started almost 60 percent more houses in the first quarter than a year earlier. It marked the largest annual increase in single-family home starts since 1983, housing analyst Metro-study Inc. said Monday. Builders started 3,460 houses in the three-month period. North Texas’ jump in building this year was largely prompted by a shortage of finished houses for builders to sell.
A federal tax credit, which is bringing out buyers, added to the increased building. “Homebuilders are responding to the lack of new-home inventory available in the market,” said David Brown, director of Metrostudy’s Dallas-Fort Worth office. “We expect starts to increase again in the second quarter because of the looming April 30 homebuyer tax credit deadline to have a home under contract.”
Only about 3,500 completed new homes were vacant at the end of March, down from almost 11,000 at the start of 2007. It was the second consecutive quarter that home starts in North Texas rose from the previous year. Despite the big increase, D-FW homebuilding remains at less than half the level it was at the peak of the market in 2006. Quarterly home production was at its lowest point a year ago, when fewer than 2,200 houses were started in the first quarter.
New home sales in North Texas are still declining – down more than 20 percent from first quarter 2009. Only 2,983 new homes were sold in the most recent quarter, less than half the volume in mid-2008. Metrostudy is forecasting an increase in second-quarter new-home sales because of the federal tax credit, which can give first-time buyers as much as $8,000.
Even with the tax incentive, don’t expect a big increase, the analyst warned, unless the economy grows faster.
“We don’t expect to see measurable growth in new-home closings until the economy gets on more solid footing, job growth strengthens significantly and consumer confidence improves,” said Brown. Most of the growth in homebuilding in the first quarter was for homes priced at less than $350,000. “Both the north side of Dallas and north side of Fort Worth have experienced the largest increase in starts,” Brown said.
North Fort Worth had more than 200 home starts, and there were more than 100 starts in both Frisco and McKinney.
Economists are keeping a close eye on the home market, which showed sales strength in late 2009 but grew slower early this year.
“The tax credit should help, but so far the numbers are lagging,” said Dr. James Gaines, an economist at the Real Estate Center at Texas A&M University. “We’d better see some significant sales closings in April and May or we will have to conclude that the housing sector was even sorrier than we thought.