Home construction rose in the Dallas-Fort Worth area for the first time in more than three years during the fourth quarter.
The almost 10 percent jump in home starts came as the inventory of new houses on the market fell to low levels, housing analyst Residential Strategies Inc. said Thursday.
The increase in the final three months of 2009 “marks the first uptick in the annual start rate since second quarter 2006,” Residential Strategies’ Ted Wilson said. “This is a significant event signaling that the housing market is in the bottoming process.”
Builders started 3,615 homes in the fourth quarter, up from 3,200 in the same period of 2008.
The biggest increase in starts was for homes priced between $150,000 and $200,000, Wilson said.
“Some of the larger builders are flexing their muscles and trying to pick up market share,” he said. “The strategy appears to be to have some spec homes ready for move-in this spring.”
For all of 2009, new home starts in the D-FW area totaled 13,499 units – the lowest construction volume since 1991.
While home construction is picking up, the number of new homes sold in the fourth quarter continued to lag.
Builders closed 4,710 home sales – down about 15 percent from fourth quarter 2008. Still, sales in the just completed quarter were the strongest in all of 2009.
“The fourth quarter typically is a slower period for new home sales,” Wilson said.
The increase in homebuilding activity in the D-FW area comes after more than two years of annual declines.
“Home starts were generally up fourth quarter nationally, but that the level is still way below where it was several years ago,” said Dr. James Gaines, an economist with the Real Estate Center at Texas A&M University.
Builders in North Texas have fewer homes left to peddle than their counterparts in other parts of the country. There is almost an 8-month supply nationwide.
At the end of December there were less than 2,700 new vacant homes on the market in the D-FW area.
“Overall the supply of housing inventory is in excellent shape,” Wilson said. “Total new home inventory is at a 6.5-month supply.”
A six to 6.5-month supply of new homes is considered market equilibrium, he said.
Wilson said the new home market won’t have a real turnaround until the underlying economy rebounds.
“Consumers need jobs if they are going to feel confident about making new home purchase decisions,” he said.
Phil Hobson, Prudential Texas Properties
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