New home sales enjoy a last hurrah
Sales of new homes in the Houston area gained momentum in March, not yet reflecting an expected slowdown amid the coronavirus pandemic, according to the HomesUSA.com New Home Sales Index.
The Houston region reported 1,365 new home sales in March based on a 12-month moving average, up from 1,341 sales in February, according to HomesUSA.com.
The HomesUSA.com index tracks a 12-month moving average based on refined sales data from the Houston Association of
Realtors and other local Multiple Listing Services in the Dallas, San Antonio and Austin markets. HomesUSA.com works with more than 60 builders in Texas.
“While an overall slowdown in Texas new home sales did not materialize in March, the builders I have been speaking with are telling me this month they are seeing cancellations, due to lenders deploying more stringent underwriting criteria as well as job uncertainty,” Ben Caballero, owner of HomesUSA.com, said in a statement. “All eyes will be on April as the entire real estate industry adjusts to this unprecedented event.”
Overall, new home prices held relatively steady in March, according
to HomesUSA.com.
Statewide, new home prices averaged $355,752 in March, down from $356,303 in February, according to HomesUSA.com. Only Austin saw higher prices among the state’s four largest markets.
New homes in the Houston region sold for $348,437 in March, down slightly from $348,933 in February. The new homes in the Houston area sold for 97.6 percent of their list price.
Average time on the market in Houston was 117 days in March, slightly lower than the 118 days in February, according to HomesUSA.com.
Lawrence Dean, Houston regional director of housing information firm Metrostudy, said cancellations of new home sales have continued to increase over the past four weeks.
“Some people are losing their jobs. Some people are just generally freaked out about economic conditions,” Dean said. “Even if they’re not feeling like they’re going to lose their job, they don’t want to take a big chance on buying a new home.”
While the cancellations span all price ranges, the rate seems to be higher on homes priced at $425,000 or more, Dean said.
Houston’s first-quarter numbers paint a different picture from the reality that is setting in as builders adjust to COVID-19: shifting to more online home tours, showings by appointment only at model homes, cleaning model homes multiple times per day.
The Houston area reported 31,807 annual new home starts through the first quarter. That surpassed the previous high of 31,307 annual starts in the second quarter of 2008 as building wound down from a peak of more than 50,000 just before the Great Recession.
Now, about three-fourth of builders surveyed in Houston are aiming for 2019 sales totals that are 20 percent lower than last year’s levels, Dean said.
While foot traffic to new homes is down as much as 70 percent for most builders compared with the same week last year, digital traffic is booming, according to Metrostudy.
The Groves, a master planned community in the Atascocita area of northeast Houston, implemented new technology that lets shoppers virtually tour the community using an interactive map on its website along with virtual home tours by builders.
“We’re able to allow users from
the safety of their home to basically do their community shopping plus home shopping,”said Mike Miller, vice president at Ashlar Development — Houston. “Our digital marketing effort has really kind of helped us capture the slice of the market that’s out there still looking to buy homes.”
Weekly traffic, which typically topped 150 visitors to new homes on a normal week in The Groves before the pandemic, dropped as low as 62 in a recent week. While 5 percent of people who tour normally end up buying, the socalled conversion rate spiked to nearly 15 percent recently.
“We’re actually seeing very serious home buyers,” Miller said. “The traffic that were are getting, the conversion rates are spiking.”