According to Residential Strategies, Inc., new home starts continued to plunge within the Austin area during the first quarter of 2009. In all, the number of new home starts was only 1,215 during the first quarter this year, representing a 47% decrease when compared to the same quarter last year. This also drops the annual start rate to just 7,938, which is a far cry from the 17,128 annual starts seen in Austin during its third quarter peak in 2006. Closings in the first quarter were also down when compared to the first quarter of last year, with the total number falling to 2,145 units and representing a 31% decline.
"While many may see the lower start rate as a negative situation in Austin, it should be pointed out that builders entered 2009 with more finished inventory than they wanted," said Mark Sprague, who is an Austin partner with Residential Strategies, in an interview with Austin Biz Journals. "The consumer was pounded with negative news in the fourth quarter of 2008 - a declining stock market, credit crisis and revelation of the depth of the current recession - and because of this, confidence was eroded. As a result, most builders had higher cancellation rates on previous orders than was normal at the end of 2008. The good news is that builders have cut back on starts and focused on selling the inventory in the first quarter of 2009."
To help builders with the sell of their inventory, home mortgage rates are at the lowest they have been since 1956, with the going rate for a 30-year fixed rate mortgage being a mere 5.19%.
"The balance in our new and existing home supply has prevented the downward pressure on housing prices that is evident in other parts of the nation," continued Sprague.
Although the median price for a new home start in Austin was $220,111 at the end of 2008 compared to being $216,448 at the end of this year's first quarter, this is actually up when compared to the median price of $212,897 that was seen during the first quarter of 2008.