HOUSTON – Houston new home construction continues to roll ahead briskly as starts increased 9 percent in the first quarter over the comparable period of last year, according to Metrostudy.
A short supply of lots is holding builders back and labor shortages elongate delivery times. Many tradesmen left the industry during the recession and Houston builders have a hard time locating subcontractors.
“Builders started construction on 7,146 new homes the first quarter, the fastest pace since the third quarter of last year. These numbers represent a year-over-year gain of 9 percent,” said David Jarvis, Regional Director of Metrostudy’s Houston Market. “Houston hasn’t seen this many new homes started in the first quarter of the year since 2007.”
On an annualized basis, starts stand at 28,930, 14 percent above first quarter 2013 the strongest rolling four quarters since the third quarter of 2008, Metrostudy said.
While annual starts have outpaced annual closings since 2012, closings have increased steadily over the last eleven quarters. In the first quarter, area builders closed 6,553 new homes, bringing the annualized total to 26,463. This level of activity represents a 2.8 percent increase from prior quarter, and a 15 percent gain from a year ago. New home sales in Houston are on the fastest pace since 2009, when builders were doing “fire sales” as the Great Recession pummeled the industry.
“During the expansion phase of a housing recovery we expect to continue to see closings lag behind starts activity given the timeline of home construction and sales,” said Jarvis. “The current annualized rate of new home closings is the largest since the first quarter of 2009 when builders were still liquidating their inventory as quickly as possible. Needless to say, the sales occurring today are of a much healthier nature.”
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.
Ranked No. 2 in national job creation, Houston area employers added 80,000 new jobs over the last year, only slightly behind Miami. Realty News Report is expecting Houston to end the year with more than 80,000 new jobs, although two local economists – Bill Gilmer of the University of Houston’s Institute of Regional Forecasting and Patrick Jankowski of the Greater Houston Partnership – have projected less than 70,000 jobs will be created in 2014.
Houston’s new home market is being aided by a tight supply of existing homes for sale. Historically low existing home inventory – a 2.6 month supply – pushes would-be resale buyers into the new homes.