HOUSTON HOUSING 1Q19: Lot Supply Stabilizes as Growth Continues Up; Market is Still #2 for New Home Starts in the Country

  • Houston remains the #2 market for new home starts in the country, with annual starts through 1Q18 up 8.5% YoY. Only Dallas / Fort Worth had more starts in this period.
  • Year over year starts volume saw the greatest increase in the $200,000 to $299,999 price band (up 26.9%) and the $300,000 to $399,999 price band (up 4.9%).
  • The Houston industry is still anxious about lot supply and the volume of new subdivision developments in the pipeline; 1Q19 is the first quarter since 1Q18 in which Metrostudy observed a generally acceptable and sufficient number of future lots currently under development

Metrostudy’s 1Q19 survey of the Houston housing market shows that Houston has maintained its number two position behind Dallas / Fort Worth in terms of annual new home starts. Houston achieved 30,206 starts, representing a growth rate of 8.5% year over year. Volume growth in 2018 continued to be driven by builders and developers increasingly offering a wider product offering including a greater share of more moderately priced attainable product ($300,000 and below). This growth dynamic is expected to continue over the balance of 2019 and beyond.

Starts exceeded closings in both the first quarter of 2019 as well as the trailing twelve months ending in same. Annual new home starts volume continues to be greatest in the $200,000 to $299,999 price band. Year over year starts volume saw the greatest increase in the $200,000 to $299,999 price band (up 26.9%) and the $300,000 to $399,999 price band (up 4.9%). The sweet spot of the market in Houston continues to be in the $200,000 – $400,000 base price bands. Annual starts also increased by 15.6% in the $1M+ price band, although this makes up less than two percent of all new home starts in Houston.

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Fifty (50’) foot wide lots continue to see the greatest volume of new home starts in Houston. For the third quarter in a row, year-over-year percentage growth of annual new home starts on 50’ lots represented a greater growth percentage than that observed on smaller 40’ and 45’ lots. 40’ and 50’ lot programs along with larger 60’ lot programs achieved the strongest overall year over year starts growth, and make up 28.8% of all annual new home starts. This is largely due to smaller 40’ to 50’ wide lots offering the most attainable new home pricing.

“Metrostudy anticipates a flat to very slightly contracting annual starts volume for 2019 versus 2018,” said Lawrence Dean, Regional Director of Metrostudy’s Houston market. “The Houston industry is still anxious about lot supply and the volume of new subdivision developments in the pipeline. Metrostudy currently identifies 247,362 total future lots in the overall Houston pipeline. Of these, 31,660 of them are currently under construction and will convert to buildable VDL in the near term. This represents the first quarter since 1Q18 in which Metrostudy observed a generally acceptable and sufficient number of future lots currently under development.”

In the first three months of 2019, 16,510 total single family homes have sold on the MLS, 13,277 of which were true resales. Inventory of resale single family homes market wide is up 20% versus twelve months ago, with 18,754 properties currently on the market. While a 20% increase appears large, the Houston region was still coping with the impacts of Hurricane Harvey twelve months ago and as a result had an abnormally small resale home inventory currently on the market at the time. This reflects a slightly elevated 3.6 months of supply. MLS transactions of resale homes reflected a median price of $219,000 in March 2019, up 3% from one year ago.

For information contact:
Lawrence Dean – 713-817-0218
ldean@metrostudy.com

About Metrostudy: Metrostudy is the leading provider of primary and secondary market information to the housing and related industries nationwide. Metrostudy provides research, data, analytics and consulting services to help builders, developers, lenders, suppliers, retailers, utilities and others make investment and business decisions every day. For more information, visit www.metrostudy.com

About Hanley Wood: Hanley Wood is the premier company serving the information, media, and marketing needs of the residential, commercial design and construction industry. Utilizing the largest analytics and editorially driven Construction Industry Database – powered by Metrostudy – the company provides business intelligence and data-driven services. The company produces award-winning media, high-profile executive events, and strategic marketing solutions. To learn more, visit hanleywood.com.