- Metrostudy reports both Austin and Chicago grew in annual home starts through the second quarter.
- Austin had an increase in closings fueled from considerable job growth.
- Chicago sales were limited because of rising home prices, taxes, lack of buyer confidence and political instability.
Housing consulting company Metrostudy recently released local-level home start reports for the second quarter, revealing a rise in residential construction in both Chicago and Austin. While both metros saw boosts in annual home starts through the second quarter, the report shows Austin reported stronger sales fueled from considerable job growth.
New construction rose in Chicago, but the number of new homes completed and sold dropped by 4.1 percent to 5,960 since the same time last year. Chicago sales were limited because of rising home prices, costly taxes, lack of buyer confidence and political instability, Metrostudy says.
In Austin, annual starts hit their highest volume in three years, at 13,423 homes. Austin had an unemployment rate of 2.9 percent in the second quarter, according to MetroStudy, which is one of the lowest in the country. The healthy job market helped spur demand and boost closings 5 percent quarter-over-quarter. Annual closings reached 12,117 at the close of the second quarter.
Austin annual starts reach three-year high
In the second quarter alone, Austin-area home starts rose 17 percent compared to the second quarter of 2015. New home starts were up 8 percent compared to the first quarter this year, also.
Because of rising land and construction costs, homes under $200,000 were lacking, but homes priced between $200,000 and $250,000 gained traction, the report says.
Closings in the second quarter rose 14 percent year-over-year. Metrostudy says growing in closings has kept inventory in balance with new construction pace.
“Continued job growth in Austin will bring consistent demand to the housing market, but many potential buyers will still be forced into the multifamily and resale market due to this lack of supply,” David Brown, senior vice president of Metrostudy, stated in the report. “Builders and developers must look to innovative product and locations in order to serve these buyers in 2016 and beyond.”
Chicago sees strongest market in years
Annual new home starts in the Chicago metro increased 5.6 percent — a top pace in over seven years, accoridng to Metrostudy. During the 12-month period ending in the second quarter, 6,250 new units hit the Chicagoland market.
Over 70 percent of all new home starts in the second quarter of this year were in Cook, Kane and Will counties in Illinois and Lake County in Indiana.
Closings within the second quarter alone fell by 14.1 percent in Chicagoland compared to the second quarter of 2015.
Metrostudy says although the Chicagoland market is bustling, escalating home prices and lack of lot spaces will limit how much further the market can push. Chicago actually holds an oversupply of open lots – but not in desirable locations where builders gravitate, the report says.