Pandemic propels sales of new homes
Sales of new homes climbed in Houston and other large Texas markets in August, with September shaping up to be another strong month for sales for the homebuilding industry, according to a new report.
Closed sales of new homes hit 1,421 in August in the Houston metropolitan area, based on a 12month rolling average, up from 1,411 in July, according to realty firm HomesUSA.com. Pending sales, or homes under contract that have yet to close, rose 4 percent in August to a record 1,794 from 1,727 in July, forecasting another increase in closed sales in September.
Prices in Houston fell slightly in August in Houston to a 12-month rolling average of $348,047.
HomesUSA.com tracks a 12month rolling average of sales based on data from the Houston Association of Realtors and other local Multiple Listing Services in the Dallas, San Antonio and Austin markets.
“By every measure, new home sales were remarkably robust in August in Houston,” said Ben Caballero, owner of HomesUSA.com. “Pending sales also reached record annual levels in Houston and
throughout Texas, which is spectacular news for homebuilders, and demonstrates the incredible strength of our housing market.”
Sales have risen for four consecutive months in Houston, up 5 percent from 1,350 in April, when the spread of the coronavirus forced stay-at-home orders and business closures.
August sales rose in all four of the state’s major metropolitan markets, led by the Dallas-Fort Worth area, where more than 1,500 new home sales closed in August. Nearly 700 closed in Austin and nearly 600 in San Antonio, according to HomesUSA.com, which lists homes for more than 60 builders in Texas.
New home prices average $369,986 in Dallas, $387,588 in Austin and $297,654 in San Antonio.
Jim Gaines, chief economist at the Real Estate Center at Texas A&M University, said suburban areas are driving new home sales as people look to leave crowded cities during the coronavirus pandemic. In addition, with parents working at home and children attending school remotely, families are looking for more space.
“We’re seeing more demand,” he said, “because of the virus and people wanting to get out of higher density urban core areas and get a little more space, both in terms of size of the dwelling and land.”
Low interest rates, currently below 3 percent, are enabling apartment renters to buy houses, said Jay McManus, Houston-area president for M/I Homes, a publicly traded homebuilder based in Columbus, Ohio.
M/I Homes, which builds homes from $180,000 to more than $600,000 across 15 communities in the Houston market, has seen a 60 percent increase in sales this year compared with last.
McManus said new home sales have been helped by tight inventories of existing homes and the preferences of some buyers, worried about the coronavirus, to live in a home in which no one else has lived.
A surge in lumber prices, meanwhile, is pushing new home prices higher. M/I Homes has absorbed some of the costs from higher lumber prices but has still raised home prices about 8 percent this year, McManus said. In a normal year, prices might go up 2 to 4 percent.
“The demand is there,” he said. “Probably if it wasn’t for the historical low interest rates, it probably would have impacted demand quite a bit more.”