Metrostudy reports that their quarterly survey of the Austin market revealed a 16% increase in new home starts from the first-quarter of 2013. Metrostudy’s survey recorded 2,209 new detached home starts in the first quarter of 2014, a 16% increase from 1Q13’s total. Austin builders started 9,668 new homes in the last twelve months, representing a 15% increase year-over-year. At the same time, area builders closed 2,045 new homes in the last three months, 2% more than the first quarter of last year. Over the last four quarters, builders have closed 8,916 new homes, a 19% increase over the prior four quarters.
“The strength of demand over the last eighteen months has once again emboldened builders and developers to invest in new areas in order to keep up with the growing variety of buyers in the changing Austin market,” says Madison Inselmann, regional director of Metrostudy’s Austin market. “In order to meet the demand of today’s buyer, the market is moving into new submarkets and is introducing some new product offerings.”
“Just like last year, developers start 2014 strongly by delivering more than 2,500 vacant developed lots to the market in the first quarter. Hopefully, unlike last year, this kind of delivery can continue through the end of the year as the Austin market remains tight on available lots,” says Inselmann. The 2,584 vacant developed lots delivered in the first quarter represent the largest single quarter delivery since the first quarter of 2008. Over the last twelve months, developers have brought 8,404 lots to market, more than 1,200 fewer than were absorbed over that same period. As a result, the total lot count in Austin stands at 14,219, 8% below 1Q13’s count. The growth in new home starts has dropped the relative lot supply in Austin to 17.6 months, below the 20 months considered equilibrium in the Austin market. “The lot delivery in the first quarter was a welcomed sight after the disappointingly light delivery to end 2013. That being said, we won’t ease this lot crunch until we see consecutive quarters of delivery on this scale,” states Inselmann.
Among the positive metrics experienced in 2013 (increase in starts, rising prices, strong in-migration), one of the more significant numbers was the increase in model homes open for business. By opening new subdivisions and sections, the market will be better able to meet the robust demand in 2014 more efficiently than it could by just extending existing developments, according to Metrostudy.
“The unusually cold weather may have kept traffic numbers down to start the year but the new home marketed continued to expand nevertheless. With strong job and population growth at our backs, the new home market should continue to expand in relation to our ability to deliver lots to market. As we do continue to expand, it will be important to keep an eye on affordability in the production home market, as the median new home price continues to tick up in relation to the median household income in the Austin MSA,” concludes Inselmann.
For more information contact: Madison Inselmann at 512.473.2250 x1000
Metrostudy, a Hanley Wood company, is the leading provider of primary and secondary market information to the housing and related industries nationwide. Established in 1975 in Houston, Metrostudy provides research, data, analytics, and consulting services that help builders, developers, lenders, suppliers, retailers, utilities, and others make investment and business decisions every day. www.Metrostudy.com
Learn more about markets featured in this article: Austin, TX.