By STEVE BROWN
Real Estate Editor firstname.lastname@example.org
Home sales in North Texas finished the first quarter with a bang.
And builders started the most houses in almost a decade, driven by buyer demand.
First-quarter home sales and prices set records.
The Dallas-Fort Worth area is on track for another huge year for housing, said Dr. James Gaines, chief economist for the Real Estate Center at Texas A&M University.
“For the last two years, I’ve been saying it’s got to slow down because we don’t have enough inventory, but it just keeps on,” Gaines said. “Right now, Dallas is sitting very pretty.
“It’s all being driven by new jobs.”
D-FW’s employment market is growing by one of the biggest volumes in the country. During the year ending in February, North Texas added almost 120,000 jobs — second only to New York City among the nation’s top job-gaining metro areas.
“A lot of people are moving into the area and creating new households,” Gaines said. “That drives housing demand.”
North Texas builders scrambled to keep up with buyers in the first three months of 2017, starting the most houses in a first quarter since 2007.
During the 12 months ending with March, Dallas-Fort Worth homebuilders began work on more than 30,500 houses.
“This represents the highest level of annual construction activity since fourth quarter 2007,” said Ted Wilson, principal with Dallas-based housing analyst Residential Strategies.
First-quarter home starts were up 16 percent from the same period in 2016.
Builders sold an estimated 7,519 homes so far this year — about a 15 percent gain from year-ago totals.
“Most of the production builders are entering the summer months with solid backlogs of orders,” Wilson said. “This is especially prevalent for those builders that focus on the more affordable price points.
“The homebuilding industry has become creative in its efforts to produce affordable units” in an environment where there is massive inflation in the cost of land, lots and construction labor, he said.
With builders trying to shift their production to more affordable houses, the median price of new homes in D-FW declined slightly in the first quarter.
“In the fourth quarter, it was $350,000, and now it’s down to $343,000,” Wilson said.
That’s still about $100,000 more than what it costs to purchase a midprice pre-owned home in North Texas.
Wilson said that starts and sales of houses priced at $400,000 and up are moderating.
“The builders are migrating to the lower price points,” he said. “For the new homebuilders it’s very difficult for them to deliver a new home much under $200,000.”
High home costs have pushed new housing out of the reach for most D-FW residents.
“The median household income in D-FW is around $72,000,” Wilson said. “Only about 18 percent of the new homes being built are affordable to that household.”
Migration of higher-paying jobs and workers to North Texas in the last few years has kept builders rushing to provide houses.
“With all the immigration of jobs over the last six years, the number of households that make over $100,000 has increased by 192,000 in DFW,” Wilson said. “That’s singlehandedly holding up the new home market.
“If this massive job growth pattern starts to subside, watch out.”
Real estate agents sold more preowned houses in the first three months of the year than in any previous first quarter. Buyers purchased 9,573 preowned houses in March, up 12 percent from the same month in 2016.
And median home prices hit an all-time high of $240,000 last month. That’s also a 12 percent jump from March 2016.
The number of preowned houses listed for sale with real estate agents increased slightly in the first quarter, rising 4 percent from a year ago, with 17,818 homes on the market. But that adds up to only a 2.5-month inventory — still less than half of what is considered a normal supply.
“You still have a housing shortage, which means prices continue to go up,” Gaines said.
The biggest increase in home sales in the first quarter was in the highest-price section of the market. Sales of houses priced at $1 million and up soared 70 percent from the first quarter of 2016.
So far this year, real estate agents in North Texas have sold 356 houses priced at $1 million and up.