Central Texas Home Builders

Housing starts down in second quarter

Local home builders continue to struggle through the real estate downturn, but experts say there's light at the end of the tunnel.

Unsurprisingly, the city's new-home market shrank once again compared with the tax credit-inflated pace of a year ago.

According to housing research company Metrostudy, San Antonio builders started 1,952 single-family homes during the second quarter, down 17 percent from the same period last year.

They also sold 22 percent fewer homes, closing 1,688 deals.

“We expect that the numbers will begin to improve slightly,” said Jack Inselmann , vice president of Metrostudy's U.S. Central Division. “We have high hope and tempered enthusiasm.”Although housing starts were down through the first half of the year, Inselmann said he expects the sluggish market to improve during the second half. Overall, the numbers have been slowly moving in the right direction.

“I don't think it's going to get any worse,” Inselmann said. “I think it is going to get gradually better as we finish up this year. We will start to see some improvement beginning in 2012 with a little more momentum.”

The federal government's tax credit, up to $8,000 for first-time homebuyers and up to $6,500 for homeowners who had lived in their houses at least five years, fueled sales and shifted the traditional home-buying season early last year.

Speculative building has been down and buyers continue to spend cautiously, said James Gaines , a research economist with the Real Estate Center at Texas A&M University.

“Interest rates are still great and there's still great selection,” Gaines said. “But there's still this sentiment in the market and things have not improved markedly.”

Markets across the U.S. experienced a building dip in 2009 followed by a tax-credit-fueled rise in 2010 and then another dip this year.

But analysts agree things are getting a bit better.

“I think we've seen the worst of it,” said Bob Gardner , CEO of Legacy Mutual Mortgage. “It'll be a very slow recovery on into next year.”

Despite lackluster housing starts, Texas continues to fare better than other states.

“It tells you how bad the rest of the country is doing,” Gaines said.

New-home prices have remained stable because builders have avoided overbuilding for the past few years. There were just 1,348 finished, vacant homes on the ground at the end of the second quarter, the lowest level since 2004, according to Metrostudy.

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