Home Construction & Sales Headed Higher

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Real Estate

Dallas-Fort Worth home construction and sales will head higher in 2020
But forecasts see only modest increases in housing activity

Next year we could set records for North Texas housing — but not by much.

Dallas-Fort Worth home sales and construction totals are expected to rise only modestly in 2020, analysts say, but the expected increases could still be enough to push area home numbers to new highs.

“We are looking for you guys to have a good year in 2020,” said James Gaines, chief economist with the Real Estate Center at Texas A&M University. “Housing construction permits we are forecasting to be up somewhere between 8% and 9% in D-FW.

“Home sales by Realtors will probably see a 4% increase," Gaines said.

Through the first 11 months of 2019, North Texas real estate agents have sold almost 99,500 single-family homes — about 2% more than for the same period last year.

And median home sales prices are about 3% higher.

Gaines is forecasting that D-FW home prices may be up as much as 5% in 2020, as long as mortgage rates stay low.

“Low interest rates give people purchasing power to go buy a house,” he said. I’ve got a feeling that the general populace is beginning to feel like the period of relatively low interest rates and still relatively low housing costs won’t last long.”

Most forecast that mortgage rates will stay near current levels in 2020 or rise slightly.

The drop in home financing costs this year helped bring in more North Texas buyers for both real estate agents and builders.


“The new home market has been very good in the fourth quarter,” said Ted Wilson, a principal with Dallas-based Residential Strategies Inc. “Several builders we have talked to have said their strongest months of the year have been October and November.

“That bodes well for us to have a good spring market.”

There’s been a surge of homebuying in the last few months after a slowdown earlier in the year when mortgage costs were higher. And rising construction costs caused single-family home starts to drifter lower this year.

Residential Strategies is anticipating about 34,500 D-FW single-family starts for 2019 — down from more than 35,000 last year.

“This year our numbers are going to be just slightly below what we did last year,” Wilson said. “We are predicting 35,000 starts for 2020.”

 
That’s still about 30% fewer single-family home starts than D-FW saw before the Great Recession.

“Our builders are not being nearly aggressive as they were in 2006 when we had 50,000 starts,” said Paige Shipp of Metrostudy Inc. “We are feeling more confident about 2020.

“We have good sales, and builders are feeling a little bit better.”

But Shipp said affordability issues will continue to dog D-FW homebuilders. New home prices in North Texas top $350,000, compared with about a median price of about $270,000 for pre-owned houses.

Construction of multi-family apartment units in the area is far outpacing single-family building.

Almost 44,000 rental units are under construction in the D-FW area, according to data from RealPage Inc.

"Apartment deliveries in D-FW in 2020 should remain around the nation-leading levels seen in the past two years,” said RealPage analyst Carl Whitaker. “With healthy demand and new supply expected to hold steady, the expectation is that D-FW rent growth in 2020 should hold in line with 2019 performance.”

RealPage is forecasting that D-FW renters will see their monthly bills go up an average of 2.8% next year.

While there is lots of chatter about a potential national recession — if not in 2020 then sometime after that — all the analysts agree that housing won’t be a significant contributor to any downturn.

“Housing is not causing this one and housing is not going to be hurt as much,” said Ted Jones, chief economist for Stewart Title. “We are going to have a recession — but not now.“

STEVE BROWN | REAL ESTATE EDITOR | DALLAS NEWS

Photo cred Dallas Morning News

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