North Texas is getting a much-needed boost to its housing supply.
Homebuilders initiated construction on more than 13,000 new single-family homes across the Dallas-Fort Worth area during the third quarter of 2023, marking a slight decrease from the previous quarter but a 39% increase compared to the same period last year, according to a quarterly housing report from Dallas-based consulting firm Residential Strategies, per the Dallas Business Journal.
The North Texas region has been in need of more housing, particularly in submarkets that have seen a sharp drop in new home sales, according to Cassie Gibson, senior vice president of Residential Strategies.
“Many of the northern suburbs that have been positively affected by relocation buyers continue to show strength. However, regions of the metroplex characterized by lower household incomes continue to wrestle with housing affordability,” Gibson said in the report, per the DBJ.
Gibson claimed the submarkets are in areas of North Texas where new home sales have seen the greatest declines.
Housing affordability has been a big issue for North Texas residents wanting to purchase a home. With home prices in the region nearing all-time highs and mortgage rates reaching multi-decade highs, the increase in housing could help alleviate price pressures caused by the surging demand for housing across the metroplex following the COVID-19 pandemic push toward remote work.
“It’s interesting because the inventory for new homes in some markets is plentiful and in others is not very plentiful at all,” said Carolyn Rosson, president and CEO of residential real estate firm Ebby Halliday, according to the DBJ.
“Sometimes our clients are willing to drive a little bit further to secure a new home. With remote working since the pandemic, that has changed the process in many families’ decision[s] to purchase. If they can work from home, the location doesn’t matter as much,” she said.
Overall, the quarterly boost in future inventory resulted in the region’s annual start pace improving to roughly 45,900 units, a nearly 9% increase quarter over quarter but an overall 14.5% decrease from a year earlier, according to the report.
With regard to the outsized demand for new homes over pre-owned homes, Gibson told the DBJ that many homeowners are “reluctant to walk away from ultra-low mortgage rates,” leading to “muted” sales activity in the existing home market.
She also cited homebuilders’ ability to offer mortgage rate buy-down opportunities on new homes, which can help reduce monthly payments and increase affordability.
The average rate on a 30-year fixed mortgage was 7.69% as of October 12, while the average rate on a 15-year fixed mortgage was 7.02%, the highest mortgage rate since 2000, according to data provided by Mortgage News Daily.
Ted Wilson, principal at Residential Strategies, told the DBJ it would not surprise him if “traffic and sales moderate further.”
Officials in North Texas are keeping a watchful eye on housing levels to ensure builders are meeting the needs of their respective regions. Dallas City Council members have been keenly aware of the city’s shortage of lower-income housing units.
To ensure builders are building homes fast enough, council members and development officials have made permitting a top priority. However, while Dallas is turning out residential permits for single-family homes quicker than in previous years, overall building permit activity under City Manager T.C Broadnax has been down year over year, possibly due to the common delays and periodic backlogs seen at the City’s Development Services Department.
