Monday, July 12, 2010

Is the local real estate market looking up?

New home construction starts in DFW are up more than 50 percent this year from the first 6 months of 2009.

The number of new homes sold in the area is rising for the first time in four years, according to a second-quarter report from Metrostudy Inc. However, analysts caution that the rebound is likely to slow now that federal buying incentives are running out.

June pre-owned home sales figures, which were also released Wednesday, were down 3 percent, ending a three-month run of double-digit year-over-year sales gains.

The recent gains in new-home sales and starts have been welcome in a market that suffered through more than two years of declining construction and sales.

"This is the second quarter in a row that new-home starts in Dallas-Fort Worth jumped significantly compared to the prior year," said Metrostudy director David Brown. "Homebuilders increased starts during the first half of the year in reaction to the increased demand from the homebuyer tax credit and reduced inventory."

New Home Builders started more than 4,600 houses, the most since 2008's third quarter.

Even so, the number of new homes for sale in North Texas is at its lowest level in 13 years and is 64 percent less than its peak in 2006.

"The fact is that the inventory is gone," Brown said. "When builders sell a house, they have to start one."

At the end of June, about 4,477 finished new homes were on the market in the D-FW area – a steep decline from more than 12,000 four years ago.

North Texas builders sold 4,733 new homes during the second quarter, almost 8 percent more than in the same period last year.

The biggest jump in new-home sales this year – 24 percent – is in properties priced at less than $200,000, which go mostly to first-time buyers, Metrostudy found.

Northern suburbs have accounted for the greatest spikes in building, with a 145 percent year-over-year increase in starts in Frisco. McKinney, North Fort Worth and Little Elm also had large second-quarter gains.

But most analysts expect housing purchases to slow. "We've seen a fairly significant fall-off in sales reported by the builders in virtually every market," Brown said. "Clearly, the second half of the year is not going to be as robust."

Pre-owned home sales in North Texas are already declining. The 3 percent decline for June compared with year-earlier figures was widely anticipated. "Yes, I would have guessed a bigger drop-off," said Dr. James Gaines, an economist for the Real Estate Center at Texas A&M University.

The median price for area pre-owned homes last month was unchanged from a year ago at $155,000.

Housing economists had expected the market to retrench when the federal homebuying incentives were withdrawn. To qualify for up to $8,000 in tax credits, buyers had to have a home under contract by the end of April. "The tax credit pushed ahead a lot of buying decisions," Brown said. "But with the job growth numbers we are hearing about and stronger apartment leasing, we will start to see household formation grow. Next year we should see sales start to build back up."

Pre-owned home sales for the first six months of the year increased the most in higher-priced neighborhoods, including the Park Cities, which were up 66 percent, and North Dallas, up 44 percent.

Through the first half of 2010, the number of pre-owned single-family homes sold by real estate agents through the Multiple Listing Service rose 9 percent from a year earlier, according to statistics released Wednesday by the Real Estate Center at Texas A&M University and North Texas Real Estate Information Systems.

Median prices have inched up 2 percent so far this year.

At the end of June, 41,339 homes were listed for sale in the area. That's up 11 percent from June 2009 and the first annual increase in inventory in more than a year.

There is a 6.9-month supply of homes on the market.

With pending sales down 23 percent, year-over-year purchases are likely to drop again in July.

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