Austin Business Journal shares, "Homebuilders around Texas are optimistic that new home prices will ramp up in 2024 and that construction rates will grow as well.
Zonda analyst Bryan Glasshagel presented the company's findings for the final quarter of 2023 at the housing data firm's quarterly event on March 20.
The company surveyed homebuilder division presidents around Texas, 64% of whom expect home prices to increase between 1% to 5% this year. A majority of the respondents are also anticipating increased activity in 2024, with 75% of builders surveyed expecting starts to increase an average 10% this year.
"Consumer confidence is still driving builder activity," Glasshagel told the crowd that was gathered at the Greater San Antonio Builders Association headquarters.
That's good news for a market where new home construction was stifled by rising interest rates in 2022, after consecutive explosive years of growth during the pandemic.
Typically, Glasshagel said that starts should slightly outpace closings to keep balance between supply and demand healthy.
But in Austin, closed sales have remained relatively static, rising just 1.3% year-over-year in February, while new home construction has fallen. The exact number of new homes delivered is unclear, but in 2023, Austin added just 5 million square feet of single-family housing, compared to 8.6 million square feet in 2022 and 10.4 million square feet in 2021, according to city data.
While closed sales in Austin are fairly flat, there is potential for a spike. New listings in February rose 44.9% year-over-year to 3,915, and Austin Board of Realtors and Unlock MLS housing economist Clare Losey noted that most of the homes were more affordably priced, with a surge of homes priced under $400,000.
For reference, a home with a median value of about $400,000 requires a minimum annual income of about $98,000 to afford it, according to a Business Journals analysis of data from Zillow Group Inc. for November. The median family income for a two-person household in Austin was $97,850 in June, according to the city's Housing Department.
Builders surveyed by Zonda said that mortgage rates were the primary headwind keeping down sales and new home starts.
While the industry expects lower interest rates to bring homebuyers and sellers back from the sidelines, Glasshagel cautioned that high employment could keep interest rates on the higher side.
The decline in home starts also caused the number of vacant developed lots in the city to surge beyond the point of equilibrium,
"To get back to equilibrium, home starts will have to ramp up while VDL supply stays flat," Glasshagel said."
—ABJ's Cody Baird contributed
Source: Austin Business Journal
Written by: Ramzi Abou Ghalioum
Published: March 22, 2024
Posted by Grossman & Jones Group on
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