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Market News and Trends

Builder confidence down in Austin?

Once again I am prompted to write by articles from the national press:

July home building up

Builder Confidence Declines In August

Without any doubt there is reason for concern about the near-term direction of the U.S. economy, and two rounds of homebuyer  tax credits have distorted seasonal demand patterns, leaving no reliable way to predict market activity in the coming months.  In  the Austin area, school begins again next week and that is likely to suppress home purchases by families with school-aged children.  

Regarding new  construction and builder confidence in the area, though, here are some charts and comments that I hope are useful:

The newest “final” data that I have found on new single-family residential building permits in Texas runs through June 2010:

Austin Area Building Permits Thru June 2010

The market peak in 2006 is obvious, as is the two-year decline that
followed.  Note the clear upward trend since November-December

Focusing more narrowly on the Austin metropolitan area:New Construction Units Sold July 2009 - July 2010

The number of new homes sold in July 2010 was down 40% compared to the
previous month.  Remember that the second tax incentive program
initially required closings by the end of June.  It was
subsequently extended to allow builders time to complete in-progress
homes, but most transactions were completed within the initial deadline.

But look at what happened to pricing in that down month of July!
New Construction Median Sold Price July 2009 - July 2010

My personal experience in the past several weeks is that demand has
actually gained some ground in higher price ranges that were not
significantly impacted by the tax credits.

This new construction data matches that experience.

The number of pending contracts for new houses is also interesting:

New Construction Pendings July 2009 - July 2010

And the number of new homes still on the market in July was up, while the supply-and-demand picture and time on market remain  quite acceptable:
New Construction Units For Sale July 2009 - July 2010New Construction Months Supply of Inventory July 2009 - July 2010
Most analysts consider 6 to 6 1/2 months of inventory to be a “balanced” market, and as I have pointed out in recent months,  Realtors® and builders in many other parts of our great country would consider 75 days on market to mean “back to boom times.” 

Of course, it may be that a comprehensive survey of home builders in the Austin area will show that they lost confidence in August,  just as reported nationally.  The builders I talk to, however, while cautious, aren’t waiting for the sky to fall, and this recent market performance is relatively positive given conditions in other places.

About Bill Morris, Realtor

Many years of business experience (high tech, client service, business organization and start-up, including almost 20 years in real estate) tell me that service is the key to success and I look forward to serving you. I represent both buyers and sellers throughout the Austin metropolitan area, which means first-hand market knowledge is brought to bear on serving your needs. Learn more about my background and experience, my commitment to my clients, my profession, and to the real estate industry at


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