North Texas homebuilders saw a surge of sales activity at the start of this year, a relief as they worked to sell the record number of homes they started to build when the market was especially hot.
Builders closed 13,067 new-home sales in the first quarter, according to Dallas-based housing analyst Residential Strategies.
The number of homes under construction dropped from a peak of 42,936 in the second-quarter 2022 to 27,558 in first-quarter 2023.
At the end of 2022, builders pulled back on starting new homes at the fastest pace since 2009 in response to the slower market.
They pushed on the gas slightly this year, starting construction of 9,691 homes in the first quarter, up from 8,060 in the fourth quarter but down 39% from 16,014 a year ago.
Ted Wilson, principal with Residential Strategies, said builders had been concerned about accumulating a backlog of unsold homes after building so many speculatively without committed buyers, a response to a market that was flooded with buyers and had prices rising at a rapid pace.
Having too much inventory is now less of a concern with builders seeing higher demand than they expected. Additionally, the existing-home market still has far less supply than it needs to have enough options for buyers.
Homebuilders “dodged a bullet with the exceptionally strong market that has transpired since January,” Wilson said in a statement.
Wilson said field reports indicate many relocation buyers who moved to D-FW over the past two or three years chose to rent instead of buy as prices rose and mortgage rates increased.
Buyers are coming off the sidelines and taking advantage of discounts and mortgage rate buydowns builders are offering, he said.
“The typical homebuyer is now making peace with this era of higher mortgage rates and is moving ahead with their purchase decision,” Wilson said.
The average 30-year mortgage rates rose above 7% for the first time in two decades in October, slowing local sales activity. Rates are now closer to 6%, making it easier for buyers to pencil deals into their budgets.
