The Houston housing market maintains growth in the first quarter
(Houston, TX – May 7, 2013) Through the first three months of 2013, several significant trends are emerging that will have a continuing 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 February, the Greater Houston job market retained the top spot in the nation in terms of annual job growth, adding 118,700 jobs over the previous twelve months. This brings the total employment in the Houston MSA to 2,877,313. “The University of Houston Institute for Regional Forecasting, the Greater Houston Partnership and Stewart Title are all expecting annual job growth for 2013 of about 70,000 to 75,000 new jobs, which would still be an above average year. The anticipated decline in the pace of job growth is due to a slowdown in oil patch hiring,” said David Jarvis, Regional Director of Metrostudy’s Houston Market. As a result of the strong job growth in 2012 Houston’s unemployment rate has dropped from 7.2% in 1Q12 to 6.3% through February 2013.
Houston’s new home inertia continued with a strong first quarter as area builders started 6,422 new homes between January and March, posting a first quarter tally above 6,000 for the first time in five years. Houston’s 1Q13 starts total is 32% greater than that of 1Q12, well into the local housing recovery. On an annual basis, Houston builders started 25,105 new homes as of 1Q13, a 29.4% increase from 1Q12 and the highest year end tally since before the recession. “The growth in the pace of starts seems to be following a linear trajectory as lot supply constraints have prevented Houston builders from ramping up their starts even more rapidly. While annual starts have outpaced annual closings since 2012, closings have increased steadily over the last seven quarters,” said Jarvis. In 1Q13, area builders closed 5,774 new homes, bringing the annual total for 1Q13 to 22,834. 1Q13’s closing tally represents a 24.1% increase in closings activity when compared to the same period in 2012.
Metrostudy’s 1Q13 survey recorded 8,067 homes currently under construction, 704 more than the count at the end of 2012, which equates to a 4.2- month supply. Conversely, the supply of homes sitting finished and vacant has declined 12.8% during the last twelve months, a result of the sharp swing in demand experienced in 2012 and into 2013. Builders, in the first quarter, also saw a decline in the number of active model homes to only 803 reported in the first quarter of 2013. The total inventory of new homes in the market at the beginning of 2013 reached its highest count since 2009 with 12,420 homes. Though the number of finished vacant homes in the market remained nearly static from the fourth 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 1.9 months, a seven year low. “In fact, the market currently has more than twice as many homes under construction as it has homes sitting finished and vacant. The sizable difference between these two categories of inventory confirms the ability of builders to tighten their inventory over the last nine quarters and highlights the vigorous new home demand present in Houston,” said Jarvis.
Vacant developed lot absorption outpaced new delivery by 1,405 lots in 1Q13 as developers and builders worked to match the quick turnaround in demand experienced locally. As of 1Q13, 18,189 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 7,000 lots. As a result, Houston’s relative supply of VDL rests just below 20 months, slightly below market equilibrium. “Moving forward, lot availability will be a key factor for the continued success of the Houston market,” said Jarvis.
“Job growth, tight inventory on resale homes, and low interest rates will all be important factors have contributed to a very impressive first quarter of 2013 for the single-family home market in Houston. Keeping a finger on the pulse of these trends will help gauge the momentum of the market moving forward,” 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
About Hanley Wood
Hanley Wood, LLC is the premier media, information and marketing services company serving the residential, commercial design and construction industries. Through its operating platforms, the company produces award-winning digital and print publications, e-Newsletters, websites, marquee trade shows and events, market intelligence data and custom marketing solutions. The company also is North America’s leading publisher of home plans.