This Article was copied from the Dallas Morning News and written by Steve Brown
North Texas homebuilders shrugged off worries about the pandemic and startedthousands more new houses during the second quarter. Local builders started 10,579 homes during the just-completed quarter — a 17.9% jump from a year ago.
The 12-month total for home starts — 39,847 in Dallas-Fort Worth — is the highest point the area has hit since the Great Recession, according to the latest report from Residential Strategies.
The jump in homebuilding and new home sales stands in stark contrast to other areas of the local economy, which have faltered with the COVID-19 pandemic. “Everybody in the industry has been struck by how strongly this market has opened up,” said Ted Wilson, principal of the Dallas-based housing consulting firm. “From mid-March to April, it was gloomy out there.
“Around Easter, most of the builders were running around 30% to 40% of plans,” he said. “When things opened back up, we saw an instant rebounding of the market, and it has continued.” D-FW builders sold 10,565 homes during the second quarter, up 16.4% year-over-year. “Many of our clients reported record sales in May, and the sales momentum has continued into June and July,” said Wilson.
The surge in new home sales comes in spite of rising unemployment in the area and the loss of more than 300,000 local jobs due to the pandemic.
“It makes you scratch your head when you see the backdrop of the incredible job loss taking place,” Wilson said. “Effectively the job gains for the past three years were wiped out in one month.
“You have housing demand creation because of the drop in mortgage rates — it’s stronger than the demand destruction from the job losses.” Record low mortgage rates have prompted many first-time homebuyers to make a move.
“A lot of these millennials that were cooped up in their houses during this shelter-in-place period have decided to upgrade their living conditions,” Wilson said. “The lower mortgage rates have allowed them to do that.” Builders confirm the jump in sales, some of which are being driven by lifestyle changes. “May and June sales were up over 100% from prior year for Bloomfield Homes,” said CEO Don Dykstra. “We are seeing a large move out of apartments to get more space and separation.
“Also, reconfigured households with adult children moving back home from college” or moving back home after losing a job are increasing, he said. “Additionally, elderly parents and grandparents are joining some households. Many of our floor plans offer multiple suites that accommodate these changing lifestyles.” Longtime North Texas builder Bill Darling said his family’s Tradition Homes, which was founded just last year, is seeing good sales traffic. “It as been very active — actually hard to believe with all that’s going on,” Darling said. “Tradition Homes is off to a very fast and positive start.”
The greatest new home demand was for houses priced under $300,000, according to Residential Strategies. The strong second-quarter new home sales report comes on the heels of a 16% jump in sales of North Texas preowned houses in June. Wilson said while the low mortgage costs are motivating buyers, there are still concerns about the increasing number of COVID-19 cases in Texas and the potential for another lockdown.
“The builders are very clearly watching what’s happening out there with the increases in COVID,” he said. “Is this going to be more of a rollercoaster where you can ratchet down again?” So far, the D-FW housing market is holding up better than early predictions. “It’s going to be a much stronger year than people were anticipating,” Wilson said. “Other areas of real estate are singing the blues, but it’s quite good over here. “The single-family home part is red hot.”