Dallas-Fort Worth housing starts just fell off a cliff.
Dropping demand has sent home starts around Dallas-Fort Worth into a free fall. Builders began construction on 9,603 homes during the third quarter — a 34 percent plunge from 14,549 starts in the same period of 2021, according to the Dallas Business Journal.
“With mortgage rates now topping 6 percent, housing affordability has become increasingly challenging,” Ted Wilson of Residential Strategies said in a report released Monday. “Monthly payments on houses are now over 50 percent higher than they were in January of this year.”
Homebuilders are scrambling to unload their inventories by year-end with price cuts and hefty incentives for real estate agents.
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“Many builders had approached the market with ‘spec and release’ programs — starting houses speculatively and releasing them for sale late in the construction process when construction prices were more certain,” Wilson said. “As a result of this approach, there currently is a surplus supply of unsold units in the construction backlog. Builders are curtailing their starts until this inventory is worked down.”
This past quarter was the first since 2019 when closings surpassed starts in Dallas-Fort Worth. After hitting a record peak of 42,965 homes in the second quarter of this year, under-construction inventory in the metroplex dropped by 4,681 homes, or 10.9 percent, in the third quarter to 38,284 units.
This correction is “part of the normalization process,” said Wilson, “where builders return to more historical construction cycle times (the time it takes to build a house) and remove the excessive construction cost inflation that has plagued the industry in recent quarters.”
— Maddy Sperling