Construction workers on the roofs of two adjacent houses in the Eastridge neighborhood under development in Princeton. New home sales now represent almost 40% of the home market in North Texas. BILL HETHCOCK

North Texas homebuilders posted a strong performance for new home starts and a mediocre showing for closings during the first three months of the year.

Home starts were up 44.7% year over year in the Dallas-Fort Worth metro in the first quarter, according to info from Dallas-based housing analytics firm Residential Strategies Inc. Homebuilders initiated construction on 14,217 units during the period, up from 9,828 in the first quarter of 2023.

As a result, the annual start rate climbed to 54,706, the highest annual pace since the second quarter of 2022, according to Residential Strategies.

“The decline in the 30-year mortgage rate to under 7% re-stimulated housing demand,” Ted Wilson, principal with the firm, said in the report released April 12.

Affordability continues to be a key factor for many homebuyers in today’s market, Wilson said.

“While builder rate buy-down programs are enormously important in stimulating housing demand, the continued expectation of a lower rate environment that will allow future mortgage refinance is a key factor in continued housing expansion,” he said.

Anecdotal reports from DFW homebuilders indicate that traffic and sales were robust during January and February, but March brought mixed results for many builders, said Cassie Gibson, executive vice president of Residential Strategies.

The relative strength or weakness of the North Texas housing market depends on geography, she said.

“DFW continues to be a bifurcated market for homebuilding,” Gibson said in the report. “The northern submarkets continue to attract a larger percentage of relocating households with strong incomes and those continue to be the top performers for new housing demand. Buyer qualification is a more prevalent issue in southern DFW markets and builders report narrower profit margins in these areas.”

Dallas Business Journal has reported on new neighborhoods rising in northern suburbs such as Anna, where Megatel has a $1 billion community with a lagoon amenity underway, AnaCapri; NorthSky, which could have around 1,000 homes in Celina; and a new Hillwood community that could have 4,000 homes, also in Celina.

That’s not to say big neighborhoods aren’t being developed elsewhere, such as the 1,400-acre Solterra in Mesquite.

New home closings were essentially flat compared with the same period a year ago but slightly stronger compared with yearend 2023. Builders closed 12,965 homes during Q1 2024, a decrease of 0.8% year over year, according to Residential Strategies.

The annual closing rate remains above 50,000 homes at 52,625.

“A year ago builders were very focused on selling down finished [speculative] inventory as they entered 2023,” Wilson said. “This year, while builders did flush much of the older inventory during [the first quarter], they appear more comfortable with the prospects of selling speculative construction and have been more aggressive with starts.”

At the end of the first quarter of this year, there were 28,525 homes under construction, up slightly from 27,781 under construction at the same time last year.

Having available inventory gives homebuilders an edge over the resale market, which continues to be restricted with limited listings, Gibson said.

As a result, new home sales now represent almost 40% of the combined new and existing home market in North Texas, according to the Residential Strategies analysis.

The firm includes single-family rental homes as part of its quarterly housing data. Builders started 1,002 single-family rental units in the first quarter in North Texas, putting the annual pace at 5,669 single-family rentals. Built-to-rent represents 10.4% of North Texas’ new home starts.