New Home Start Crunch in Texas

New home starts in Texas took a dive in August 2016, down 21.6 percent seasonally when adjusted for year-over-year comparison, despite being up over the year and over the month. This is despite high demand throughout most of the state, according to the Real Estate Center at Texas A&M University’s latest Texas Housing Insight report. Center Research Economist Dr. Luis Torres said the slowdown is being caused by a shortage of workers and developed lots. “For this to change,” he said, “there has to be either an increase in the number of residential construction workers or a slowdown in the demand for new housing.” The report doesn’t comment on the potential for increased numbers of construction workers, but it does say that the demand for housing is not showing any signs of slowing. Year-over-year, the largest Texas metros show gains in home sales: Austin at a 7.4 percent increase, Dallas-Fort Worth at 5.2 percent, Houston at 8.3 percent, and San Antonio at 12.1 percent. Texas as a whole saw home sales increase in August by 7.4 percent year-over-year seasonally adjusted and 7.2 percent nonseasonally adjusted. New home prices also are more expensive: 48 percent higher than resale median price and 37 percent higher than resale average sales price, when comparing to the time period beginning in 2011. For price per square foot in new homes, the average price is about 19 percent more than for resale homes. “This price differential is primarily a result of increases in home size for newer homes and the significant increases in construction and land costs for new homes,” Torres said.