Homebuilding pace in region gains steam in second quarter
End of buyers’ tax credit isn’t a sure precursor to slowdown in year’s second half, firm says
Austin-area homebuilders started construction on nearly 11 percent more houses in the second quarter than a year ago, and there are signs that activity will continue to pick up despite the expiration of the federal tax credit for buyers, according to a research firm.
“While the tax credits enhanced new construction this spring, especially at the more affordable price points, we were pleased to hear from many builders that they were seeing buyers coming back into the housing market for reasons apart from the tax credit,” said Tommy Tucker, Austin division manager for Residential Strategies Inc., which tracks the housing market.
However, with the lapse of the tax credit, along with “a tepid economic recovery,” Tucker said, “many builders reported mixed results regarding buyer traffic and sales during May and June.”
Builders started construction on 2,109 houses from April through June, a 10.8 percent increase from the same months in 2009 and a gain of 32.3 percent compared with the first three months of this year.
The median price of a new home increased 3 percent to $203,476 in the second quarter,
which Tucker attributed to increased activity by builders on homes in the $200,000 to $400,000 price range. However, the median price is still off 4.3 percent from the same quarter last year.
Tucker said Austin-area builders “have shown discipline by not creating an oversupply of housing,” which should help keep prices stable.
Eldon Rude, the Austin director for housing market research firm Metrostudy, said that many of the 36 markets in which Metrostudy conducts surveys have reported sharply lower sales in recent weeks because of the tax credit expiring.
However, Rude said, the growing strength in Austin’s job market should provide some traction for the market this year. “Few cities in the U.S. are seeing investments like Samsung’s $3.6 billion expenditure to expand its semiconductor facility here, one that will immediately create jobs in our region.”
Rude said he doesn’t expect a strong turnaround this year, but he thinks the new home market is likely to begin to show marked improvement in 2011.
As builders rushed to complete home sales for tax-credit buyers, closings rebounded in the second quarter, Residential Strategies reported.
There were 1,961 completed sales, up 21.4 percent from the previous quarter and up about 9.4 percent from midyear 2009.
Over the past four quarters, builders started 7,360 homes, an increase of almost 8.5 percent from the low point in the annual starts rate of 6,786 in late 2009, Residential Strategy said.