State of the Market Report: Dallas
Consistently exceptional job growth in the Dallas-Fort Worth market fueled home sales in the fourth-quarter, and while that growth is expected to continue in 2015, the dramatic decrease in oil prices may soon rear its ugly head throughout the Texas economy. This would place significant stress on the new home market, where affordable homes are becoming scarce.
Extended construction cycle time and increased starts led
to a 10% jump in new home closings in 2014 to 21,900. Finished inventory grew
26%, but inventory persists at a historically low level. Despite a healthy
starts in the fourth-quarter just north of 6,000, higher lot prices is leading
to a drop in starts under $200,000, which will likely continue in 2015. The
affordability issues plaguing the market has led to a 12% growth last year in
the existing home market. Both the entry-level and first-time home buyers are
being pushed out of the new home landscape, and it’s expected that new homes in
Dallas under the $200,000 will soon come close to nonexistent.
The median new home price in the market
jumped from about $269K to $282k between the first and fourth-quarter with no sign
of relief, but a healthy chunk of new home closings throughout the year still
fell between $151k and $200k. The median closing price in the fourth-quarter
marks the maximum for the Texas markets at 10 grand higher than Austin’s median
new home closing price.
“The increased starts was driven by strong sales
during the fourth quarter with interest rates falling and builders slightly
increasing their spec inventory heading into the spring selling season.”
“There are currently approximately 16,000 lots under construction in DFW. Total lot inventory likely bottomed out in 2014.”
In the fourth-quarter, DR Horton and Pulte Group took home nearly half the market share in closings among builders, but First Texas Homes held their own with 261 closings.
