A surge in homebuilding in Central Texas sent housing starts to a near all-time high in the second quarter, according to Metrostudy, which tracks the numbers.
Vaike O’Grady, Metrostudy’s Austin regional director, released the latest figures Thursday during a mid-year forecast event sponsored by the Home Builders Association of Greater Austin.
“The Austin housing market is benefiting from continued strong demand and that has resulted in near-record housing starts,” O’Grady said. “Results are being tempered though, by pressures on home prices due to labor shortages, construction materials cost increases, permitting and regulatory costs.”
Builders started construction on 4,198 homes in the second quarter, a 31.7 percent increase from the same quarter in 2016, O’Grady said.
The peak for quarterly starts peak came in early 2006, when builders started construction on 4,387 homes in the Austin-area, Metrostudy figures show.
On an annual basis, starts rose 19.5 percent for the 12 months that ended in June, to 15,459 starts, Metrostudy said.
The supply of available housing hit a record high in the quarter, Metrostudy said. Total inventory — which includes models, finished but vacant houses and homes under construction — stood at just over 8,900 homes.
The previous record for inventory was in the first quarter, with a supply of 8,385 houses, O’Grady said. “You have to go back to 2007 to hit 8,000 again,” she said.
The local housing market is being fueled by “significant activity” in the price ranges below $300,000, she said. Nearly half of the homes started from April through June were priced between $200,000 and $300,000, O’Grady said.
“Every segment is growing, but the real fuel in the market is in the $200,000 to $300,000 price range,” O’Grady said. “Builders who can provide homes below $300,000 seemingly can’t build them fast enough.”
Across the region, the median new-home price remained relatively flat in the second quarter at $287,440, up 2.2 percent from $281,075 a year ago, per Metrostudy.
“This is likely reflective of a change in product mix — more homes below $300,000 hitting the market,” O’Grady said. “It also may reflect some softness at higher price points where there is more competition.”
O’Grady said she sees the most potential for growth outside the city of Austin’s central core, as rising prices push residents to the outskirts where more moderately priced housing can be found.
“Buyers who are looking for homes below $300,000 now have more choices, thanks to the large number of new lots coming online” in areas served by the U.S. 183 and Texas 130 toll roads, she said.
Eldon Rude, a longtime local housing market expert, said that after playing catch-up for the last several years, “the supply of lots for homes priced below $325,000 is finally reaching the point where builders can start enough homes to satisfy buyer demand.”
While those homes might be located farther from Austin than some buyers would prefer, O’Grady said, “they are compromising commute time in order to have a new home that fits within their budget.”
The number of available lots ready for housing also rose 5.7 percent over the prior 12-month period, with 17,725 lots hitting the market. O’Grady said that’s the highest number since 2001, when Metrostudy began tracking the market. The previous record was 17,452, in late 2006.
Rude said that with job growth slowing in the region, “I don’t expect we’ll see starts continuing to increase at their recent pace. But with so much pent- up demand for homes the market will likely remain strong well into 2018,” he said.
O’Grady also forecasts a strong 2017. “The only thing tamping us down is price,” she said.
Quarterly home starts by price range:
$100,000-$199 — 315
$200,000-$249,000 — 936
$250,000-$299,000 — 1,111
$300,000-$349,000 — 616
$350,000-$399,000 — 393
$400,000-$499,000 — 416
$500,000-$699,000 — 289
$70,000-$999,999 — 72