Houston Number One in Home Building in 2023?

LAS VEGAS – (Realty News Report) – Houston is in a position to lead the nation in single-family construction in 2023 as Texas markets continue to dominate in home building, according to Robert Dietz, chief economist of the National Association of Home Builders.

In 2022, Houston led the nation in single-family building permits with 45,584 construction permits, followed by Dallas with 41,437, according to recent stats from the U.S. Census Bureau.

“The demand in Texas is driven by population growth,” said Dietz, speaking at a 2023 forecast press conference last week in Las Vegas. “We’re likely to see a decline in Austin. But if you look at the fundamentals in Dallas and Houston, they will continue to be the top two homebuilding markets in 2023.”

However, the housing outlook is challenging for the year ahead, even though Houston and Dallas remain at the top of a building industry in a rough patch.

In another sign of the current housing recession, the top five single-family markets all posted declines in 2022 when comparing the number of permits issued year-to-date through November 2022 vs. the same time period through November 2021. The markets in descending order are Houston-The Woodlands-Sugar Land; Dallas-Fort Worth-Arlington; Phoenix-Mesa-Scottsdale; Atlanta-Sandy Springs-Roswell; and Austin-Round Rock.

Home Building to Decline 26 percent in 2023

On a national basis, single-family housing starts are expected to drop 26 percent in 2023, the NAHB economist said. Elevated inflation and mortgage rates, along with the high cost of building materials are responsible for the dim outlook in early 2023.

Affordability is a major concern, Dietz said. Mortgage rates have more than doubled since the beginning of 2022. The difference between a 3 percent and 6 percent mortgage rate can add more than $700 per month to the cost of a typical home loan.

Market Turnaround in Late 2023, Leading to Strong Rebound in 2024

Dietz says a mild recession will descend on the nation in the first half of 2023, leading to a recovery later this year and a rebound in 2024 as the Federal Reserve eases.

The NAHB economist expects that the Fed will raise short-term rates by another 25 basis points in February and a final quarter-point increase in March.

“With interest rates projected to normalize in the second half of 2023 as the Federal Reserve taps the brakes in its fight against inflation, the pace of single-family construction will bottom out in the first half of 2023 and begin to improve in the latter part of the year,” said Dietz. “This forward momentum will lead to a calendar year gain for single-family starts in 2024.”

NAHB is projecting that single-family production will fall to 744,000 homes this year before rebounding to a 925,000 annual pace in 2024.

Feb. 6, 2023. Realty News Report Copyright 2023

Photo: NAHB Chief Economist Rob Dietz speaks at press conference in Las Vegas at International Builders Show. Photo by Ralph Bivins, Realty News Report Copyright 2023..


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File: Houston Number One in Home Building in 2023?

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