Blog Exurbs homebuying
The quest for the ideal single-family home has become an increasingly challenging one nationwide, even in the great state of Texas. Amidst fluctuating market conditions that are seeing the highest mortgage rates since 2000, homes are staying on the market longer than they were during the peak demand period we saw just months ago. Sales volume in the Lone Star state has even dropped by 14+% year-over-year.
With existing home inventories statewide remaining low, the demand for single-family homes continues to outstrip the available supply. For homebuyers seeking options in a complicated real estate landscape like this, what’s the solution?
New Construction Homes Help Fill the Gap
As the hunt for pre-owned single-family homes has become increasingly competitive due to low inventory, new construction homes have emerged as an increasingly popular option for families in need of housing in Texas.
New construction homes represent a viable solution, primarily because they’re more readily available than their pre-owned counterparts. This is especially true in Texas, which leads the nation in new construction homes. Builders recognize the high demand for housing, and are doing their best to provide new homes to accommodate it.
The allure of new construction homes in Texas is about more than just availability, however. Buyers are drawn to these properties for several compelling reasons:
- A Brand New Home with a Warranty: New construction homes come with a peace of mind that’s instantly understandable. Not only is everything in the home brand new, but new construction homes in Texas also typically include warranties, offering assurance against immediate repairs and maintenance issues.
- More Home for the Money: While existing homes in established neighborhoods have much to offer, they often come with premium pricing. Often, buyers find that new construction homes in suburban locations offer more space and modern amenities for their investment, compared to older homes in the same price range.
- Slower Pace in Suburban Environments: It’s no secret that new homebuyers are often looking for a house in which to raise their growing families, which sometimes makes the hustle and bustle of a city less appealing. Many new construction homes in Texas are situated in suburban areas, offering a more relaxed and community-oriented neighborhood, complete with the lifestyle homebuyers are looking for.
- Great Schools: These suburban areas are also often associated with high-quality educational facilities, an important consideration for families with children. Even for homeowners without children, however, the upside of buying a home in a good school district is still an important factor. According to a recent report by the National Association of Realtors, a good school district is crucial to homebuyers across all age groups.
- Amenities: New developments frequently include attractive amenities like parks, community centers, and recreational facilities, enhancing the quality of life for residents. An important feature among many new home communities, amenities exhibit significant cross-generational appeal, helping to build a strong sense of community amongst neighbors.
- Pricing Incentives: With a higher inventory of new construction homes in Texas, builders are more inclined to offer incentives to new homebuyers. These can include price reductions or additional features at no extra cost, to keep their inventory moving.
- Creative Financing Options: To help attract homebuyers, many builders offer in-house financing or work with preferred lenders to provide alternative financing options. These solutions can include everything from lower interest rates (mortgage rate buydowns) to cash to apply toward down payments, or even free design upgrades. Whatever the option, this array of innovative solutions often helps make the purchase more accessible for buyers.
However, it’s important to note that the pace of new construction can vary depending on the market’s health and builders’ access to financing. In some areas, builders may slow down the construction of new homes in response to market conditions or challenges in obtaining financing. This variability means that while new construction homes are a promising option, their availability can still fluctuate based on broader economic factors.
Which Cities Had the Most New Construction Homes in 2023?
In 2023, the landscape of new home construction in the United States, and more particularly in Texas, has seen some remarkable trends. According to a study by the Chamber of Commerce, the Houston metropolitan area leads the nation with the highest number of new residential home permits issued, totaling 23,062. This is followed closely by the Dallas-Fort Worth area, which ranks second with 20,625 new home permits. Other Texas metro areas like Austin and San Antonio also feature prominently in the top 20, highlighting the state’s booming residential construction sector.
Here’s a closer look at the top two cities:
- Houston, TX: As a metro area that’s seen consistent population growth year-over-year, it should be no surprise that Houston leads the state with 23,062 new home permits. This includes 15,391 single-family homes and 7,671 multi-unit residential homes. The city averaged 5,766 new home permits per month in 2023.
- Dallas-Fort Worth, TX: When it comes to welcoming new residents, DFW is also booming. With 20,625 total new homes, including 12,738 single-family and 7,887 multi-unit residential homes, Dallas-Fort Worth averaged 5,156 new home permits monthly this year. Still, average home prices are down year-to-year by about 1%, resting around $367,000.
These figures represent a mixture of single-family homes and multi-unit residential buildings like apartments and condominiums. Houston notably ranks first for new single-family home construction, a significant factor for families seeking new homes.
The surge in new home construction in these cities can be attributed to several factors:
- Population Growth: It’s well-documented that in recent years, Texas cities have experienced significant population growth, driving demand for new housing.
- Favorable Economic Conditions: The state’s robust economy and business-friendly environment continue to attract new residents and fuel housing development across its major metro areas.
- Limited Inventory in the Existing Home Market: High mortgage rates and limited supply have created a bottleneck in the existing home market, pushing buyers towards new construction homes.
For people looking for new construction homes in Texas, these statistics are promising. The abundance of new construction in cities like Houston and Dallas-Fort Worth means more options, potentially better pricing due to competition, and the opportunity to live in brand-new, modern communities.
However, it’s important to note that the overall number of permits for new home construction is down 21.1 percent year-over-year nationwide. This decline reflects broader economic challenges, but it also underscores the relative strength of the Texas market in maintaining a robust pace of new home construction even through economic challenges.
Forecast for New Construction Homes in 2024
Looking ahead to the New Year, the new construction home market nationwide shows promising trends, especially in Texas. The Texas real estate market is expected to continue its upward trajectory, albeit with a more balanced approach. This evolution will be driven by the following factors:
- Balanced Market Conditions: After years of dynamism, the Texas real estate market is moving towards a balance between homebuyers and sellers in 2024. This shift is characterized by an increase in active listings, providing buyers with more options.
- Stabilizing Home Prices: Home prices have started to level off statewide. This trend suggests a cooling market, moving away from the rapid price increases seen during the pandemic.
- Construction Permits and Supply Growth: A rise in single-family construction permits corresponds to the strong demand for new homes. This trend is expected to drive increased supply levels in 2024, hopefully creating a more favorable market for buyers.
- Economic Stability and Interest Rates: The strength of the Texas housing market is contingent on stable or declining interest rates and a stable economy. This stability is crucial for maintaining the momentum in new home production and sales through the New Year.
Overall, the forecast for new construction homes in 2024, particularly in Texas, is optimistic, with expectations of a balanced market, stable home prices, and an increase in inventory. This outlook is dependent on continued economic stability and favorable interest rates, which are key drivers of the real estate market’s health.
Find Your New Home in a Hillwood Community
Amidst the dynamic Texas real estate market, Hillwood Communities continues to develop new home communities that are tailored to the needs of modern homebuyers. With amazing amenities, award-winning lifestyle programs, and a commitment to a culture of belonging, Hillwood’s lifestyle communities have what you need. If you’re looking for your dream home in Houston, Austin, or DFW, reach out today.