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 American-Statesman - - BUSINESS AND PERSONAL FINANCE - By Shonda No­vak

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.

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