DFW Home Builders Accelerate New Housing Starts

Builders in North Texas significantly ramped up construction in the final months of 2023, initiating a 50% increase in new home starts driven by robust demand. The surge propelled annual home starts to 50,244, marking a near 3% rise from the previous year, making it the second-best year for home starts despite higher mortgage rates, according to Dallas-based Residential Strategies.

Despite the market’s resilience, especially in the northern suburban areas experiencing soaring sales, other segments felt the impact of climbing mortgage rates. Southern and eastern suburbs witnessed a slowdown as rates surged above 7%, particularly affecting lower-priced housing markets and resulting in reduced business for builders in those areas.

Although the 30-year fixed mortgage rate has eased from its peak of over 8% in October to around 7%, it remains substantially higher compared to previous years, creating cautious optimism among builders for increased sales in 2024. This trend in home financing costs has fueled the growth of new home sales, while existing home transactions have lagged due to homeowners’ reluctance to move away from lower mortgage rates.

Despite the market’s resilience, especially in the northern suburban areas experiencing soaring sales, other segments felt the impact of climbing mortgage rates. Southern and eastern suburbs witnessed a slowdown as rates surged above 7%, particularly affecting lower-priced housing markets and resulting in reduced business for builders in those areas.

Although the 30-year fixed mortgage rate has eased from its peak of over 8% in October to around 7%, it remains substantially higher compared to previous years, creating cautious optimism among builders for increased sales in 2024. This trend in home financing costs has fueled the growth of new home sales, while existing home transactions have lagged due to homeowners’ reluctance to move away from lower mortgage rates.

Additionally, the inventory of finished, vacant new homes in North Texas remains relatively limited, with approximately an eight-month supply available by the end of 2023.