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04/04/2013

New homebuilders pick up pace on housing starts in first quarter. MetroStudy says

Homebuilders made a significant jump in the number of homes they have under construction in the first three months of the year, according to the latest market report from Dallas-based MetroStudy.

The start pace was the highest for a first quarter in five years, jumping 35 percent from the same period of 2012, the report said.

"It is likely homebuilders will start over 20,000 homes in 2013," said David Brown, MetroStudy’s Dallas-Fort Worth regional director. "Starts in 2013, however, will still be 60 percent below the peak activity level in 2006. Homebuilders entered 2013 with the largest backlog of sales in years."

A low supply of new and existing homes for sales, as well as continued strong job and population growth is fueling the faster pace and an increase in home prices, Brown said.

This week, CoreLogic said Fort Worth-Arlington home prices, including distressed sales, increased 4.7 percent in February compared to February 2012. On a month-over-month basis, home prices, including distressed sales, increased by 0.6 percent in February from January.

Excluding distressed sales, year-over-year prices increased 8.8 percent in February. On a month-over-month basis, excluding distressed sales, the CoreLogic HPI indicates home prices increased 2.5 percent in February from January.

Homes prices nationwide increased 10.1 percent in February, excluding distressed sales, and CoreLogic says that March prices should be about 10 percent above March 2012.

Brown said he expects new home prices to increase more than 10 percent this year.

"It’s not just the strong demand and low supply driving up prices; builders are getting hit with increased lot costs, construction costs and labor costs" he said.

MetroStudy said there were 3,182 finished vacant homes in Dallas-Fort Worth at the end of March, less than half the inventory at the end of 2008, the last year builders started 20,000 homes, and a fourth of the inventory at the peak in 2006.

Also, new home starts were up the most for homes priced over $200,000 because near record low interest rates is driving home affordability and allowing buyers to purchase larger, more expensive homes, Brown said.

The new home market recovery has been led by the northern suburbs with Frisco and McKinney showing the largest increase in starts over the last year. The recovery in the last six months has spread to other areas, including Grand Prairie, Crowley, Burleson and southwest Tarrant County, MetroStudy said.

At the end of the quarter, MetroStudy recorded 4,312 new home starts and 4,158 sale closings. Inventory of lots fell to 50,721, the lowest number in the last five years, the report shows.

_ Sandra Baker

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