Homebuilders expect fewer home starts in 2007

Dallas Business Journal

by Christine Perez

Staff Writer

Dallas-Fort Worth builders expect to cut home starts back 2% in 2007, according to a survey conducted by Residential Strategies Inc.

Builders that specialize in homes priced under $175,000 say they'll start 7% fewer homes next year; those in the $250,000+ category are planning to cut starts by 4%. Only builders in the $175,000 to $250,000 group are planning to increase production, by about 9%.

Competition, margins, buyer traffic, lot price increases and cancellations are the top builder concerns for 2007. Top reason for buyer fallouts? Many are continuing to shop after putting homes under contract, the builders say, and relocation buyers are having a more difficult time selling their existing homes in other parts of the country.

Two-thirds of the builders anticipate optioning more lots in 2007, with an average increase of 18% over 2006. However, they're quick to point out that they'll only buy and develop in the right locations, with infill sites being popular.

On the good news side, the Dallas-Fort Worth market is seeing more relocation buyers -- up by 25% in 2006 over 2005.