By: Shonda Novak
In a sign of continued improvement in the local new-home market, builders started construction on 1,983 houses in the second quarter, up 9 percent over the same quarter last year, housing research firm Metrostudy said Monday.
That number was the highest quarterly total since the third quarter of 2009, Metrostudy said, when a federal tax credit for first-time homebuyers fueled demand and prompted homebuilders to increase supply.
Metrostudy’s Eldon Rude attributed the healthy starts total “to continued strong job growth in the Austin area, which is bringing in new residents, as well as slowly improving consumer confidence.”
On an annual basis, starts totaled 6,537 for the 12 months ending in June. That’s a 19 percent jump compared with the 5,510 houses started by builders in the 12 months ending in June 2011, according to Metrostudy.
Although builders and experts say low mortgage rates and escalating apartment rents are other factors helping to spur home sales, the region’s annual pace is still off 59 percent from the calendar-year peak in 2006, when the region logged 15,974 starts, according to Metrostudy. The low was in 2010, when Metrostudy recorded 5,846 home starts for that calendar year.
But signs continue to point to a housing recovery in the Austin area, said D’Ann Petersen, a business economist with the Federal Reserve Bank of Dallas.
“Home sales and starts continue to rise, in part due to strong job growth,” said Petersen, who tracks the Central Texas housing market. “Austin’s economy has added jobs at a faster pace than the state average this year. The low inventory of new and existing homes in Austin suggest we should continue to see housing construction pick up.”
Austin-area employers added more than 27,000 jobs in the 12 months ending in May, a 2.9 percent annual increase, according to the Texas Workforce Commission’s latest figures.
“I think this market’s really picking back up,” said Garrett Martin, president and CEO of MileStone Community Builders, which recently began work on its 11th new-home community in the region. “I think we have a pretty good run coming up.”
Martin said that “with rents and occupancies being as high as they are, people are realizing homeownership is now a great investment again.”
Through the first five months of 2012, builders reported a 34 percent jump in sales of new homes compared with the same months in 2011, and said their sales centers saw a 39 percent increase in prospective buyer traffic, Metrostudy said.
Next week, Centex Homes will break ground on a four-bedroom, 3,000-square-foot house priced in the mid-$200,000s for buyers Mark Wossum and his wife, Olga, in Buda’s Garlic Creek subdivision, which now has about 400 homes, with more on the way.
The Wossums currently rent an apartment in South Austin for about $1,200 a month. With rents going up, and with uncertainty about which direction mortgage interest rates might go, “everything I heard indicated that if we were going to buy, this was the year we were going to get serious,” Mark Wossum said.
With activity increasing at its communities, Martin said MileStone has increased prices “every three weeks for the last four months” at all of its subdivisions, though some more than others.
At Shadow Creek in Buda, where MileStone has sold about half of the first phase with 90 home sites, the company will break ground on the next 60-lot section in a month “because sales have been so brisk,” Martin said. At MileStone’s Riverside Villas, almost half of the 88 homes that are planned have sold, and prices are on the rise. “Our average sales price is around $205,000 … and we have been able to raise prices more than $30,000 since we started selling homes in January,” Martin said.
Petersen said that although the outlook is positive for the local market, “there are still uncertainties as the U.S. economic recovery remains fragile.”
Rude also sounded a note of caution, predicting that, although home starts could top 8,000 or 9,000 in 2013 and 2014, “until mortgage financing becomes more readily available to first-time homebuyers, it will be hard for our market to exceed 10,000 (starts) in the next couple of years.”