Houston Housing Momentum Continues, Annual Starts Above 26,000
(Houston, TX – July 22, 2013) Through the first six months of 2013, several significant trends continue to have an impact on the market for new homes in the Houston area. These include robust job growth, low resale inventory, and high affordability –all driving new home demand. This is according to a recent report by Metrostudy, a national housing data and consulting firm that maintains the most extensive primary database on residential construction in the US housing market.
In May, the Greater Houston MSA added 91,600 new jobs over the previous twelve months, a 3.4 % increase according to the Texas Workforce Commission. Although the pace of job growth has slowed, it is still well ahead of the 10-year average growth rate of 2.0 %,” said David Jarvis, Regional Director of Metrostudy’s Houston Market. As a result of the strong job growth in 2012 and 2013 Houston’s unemployment rate has dropped from 7.5% in 2Q12 to 6.1% through May 2013.
Houston’s new home momentum continued with a strong second quarter as area builders started 7,678 new homes between April and June, posting a second quarter tally above 7,000 for the first time in five years. Houston’s 2Q13 starts total is 14% greater than that of 2Q12, well into the local housing recovery. On an annual basis, Houston builders started 26,080 new homes as of 2Q13, a 24% increase from 2Q12 and the highest annual tally since before the recession. While annual starts have outpaced annual closings since 2012, closings have increased steadily over the last eight quarters. In 2Q13, area builders closed 6,181 new homes, bringing the annual total for 2Q13 to 23,666. 2Q13’s closing tally represents a 17% increase in closings activity when compared to the same period last year. “Given the time required to complete a home, closings tend to trail starts in a growing market,” said Jarvis.
Metrostudy’s 2Q13 survey recorded 9,785 homes currently under construction, 1,718 more than the count at the end of the first quarter, which equates to a 5.0 months supply. Conversely, the supply of homes sitting finished and vacant has declined 6%. Builders also saw a decline in the number of active model homes with 792 reported in the second quarter of 2013. The total inventory of new homes in the market at the end of 2013 reached its highest count since 2009 with 13,919 homes. Though the number of finished vacant homes in the market remained nearly static from the first quarter, it remains at historic lows as builders see their speculative homes purchased before reaching completion. The relative supply of finished vacant homes in the market currently rests at 1.7 months, a seven year low. In fact, the market currently has nearly three times as many homes under construction as it has homes sitting finished and vacant.
Vacant developed lot (VDL) absorption outpaced new delivery by 2,091 lots in 2Q13 as developers and builders worked to match the quick turnaround in demand experienced locally. As of 2Q13, 19,806 new lots were delivered to the market in the past 12 months. In any of the three previous years this delivery would have been within 2,000 VDL of the total number of lots absorbed for the year. However, demand for new lots outpaced new deliveries by nearly 6,200 lots during the past twelve months, leaving Houston with 39,275 lots on the ground. As a result, Houston’s relative supply of VDL rests just above 18 months, below market equilibrium of 20-24 months. “Moving forward, lot availability will be a key factor for the continued success of the Houston market,” said Jarvis.
“Job growth is one of the single most important drivers of home demand, and Houston’s pace of job growth is one of the highest in the nation. Another important driver for new home demand is the extremely tight inventory of resale homes available on the market. All of these factors have contributed to a very impressive first half of 2013 for the single-family home market in Houston,” said Jarvis.
For information contact:
david jarvis @ 713.622.9909 x 132
Metrostudy, a Hanley Wood company, is the largest provider of comprehensive research and insight for the real estate industry. Builders, developers, banks, manufacturers, retailers and many other industries all rely on Metrostudy’s data and analytics to support strategic business decisions at the local, regional and national market level.www.Metrostudy.com
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