Builders scaled back construction in the most recent quarter as rising mortgage rates pushed more homebuyers to the sidelines.
Dallas-Fort Worth single-family home starts are down more than a third from the third quarter of 2021, according to a new report from Dallas-based housing analyst Residential Strategies.
This was the largest year-over-year decline in D-FW home starts in nearly a decade.
“Right now, mortgage rates are over 6%. Affordability for housing is becoming increasingly difficult,” said Ted Wilson, chief of Residential Strategies, in a report. “Monthly payments for housing this year he is more than 50% higher than he was in January.”
With fixed-rate 30-year mortgages averaging nearly 7%, $300,000 loan payments are soaring by more than $700 per month, enough to secure many potential new homebuyers in the market. .
The sudden slowdown in D-FW housing starts follows several years of strong increases in North Texas home construction and sales.
Despite lower construction starts, new home sales in the third quarter were up more than 9% year-over-year. Many of these buyers had fixed mortgage rates when they signed their home purchases before the recent rise.
“The unfortunate reality for many first-time buyers is that their homes for sale are falling short of budget,” said Kathy Gibson, senior vice president of housing strategy. “Furthermore, many buyers who want to move are now worried about the economy and are likely to be stuck in their homes, moving away from favorable ultra-low interest rates as mortgage rates rise to his new 7%. I don’t want to buy a house.”
In the 12 months ending in September, D-FW Builder set a record by selling more than 49,000 new single-family homes.
The supply of new completed and unsold single-family homes remains low, even though some buyers are no longer able to afford it and have been forced to withdraw their purchases.
At the end of the fourth quarter, more than 38,000 single-family homes were still under construction in North Texas.
Builders started last year Record 58,140 D-FW single-family homes Sales were driven by low mortgage costs and demand generated during the pandemic.
As home prices and loan rates rise, some builders are being forced to offer incentives and lower prices to keep sales going.
The decline in D-FW housing starts in the third quarter is due to lower sales of existing homes in North Texas due to higher mortgage costs.
Existing home sales fell 17% in September It’s the fourth straight month of year-over-year declines, according to Texas A&M University’s Texas Real Estate Research Center and the North Texas Real Estate Information System.