DFW Housing Market and Consumer Trends in New Construction: Insights from the Dallas Builders Association State of the Industry Summit
By Gena Godinez
Dallas Builders Association Executive Officer
As the housing market continues to navigate a complex economic landscape, recent presentations from the Texas Association of Builders, Zonda and Zillow during the State of the Industry Summit presented by Hotchkiss Insurance Agency shed light on current trends, challenges and opportunities in the Dallas-Fort Worth (DFW) area and beyond. These insights are crucial for industry professionals aiming to stay ahead in the competitive new construction market.
The Association’s annual event was held Sept. 25 at Venue Forty|50 in Addison. In addition to Hotchkiss, Summit partners were Copperweld and Corey Construction Residential and Commercial Roofing.
Scott Norman, CEO of the Texas Association of Builders, provided an important overview of the political and legislative landscape during his presentation. He highlighted the implications of the upcoming elections and the state legislative session, which could bring significant changes to the housing market and construction industry in Texas.
Norman noted that this year’s elections will see a large number of freshman representatives, which could lead to shifts in legislative priorities and policies. He emphasized how important it will be to build relationships with them and educate them about the issues facing our industry.
He also addressed recent building moratoriums that have been implemented in various parts of the state, posing challenges for new construction projects. These moratoriums are often enacted to address infrastructure and service capacity concerns but can delay development and increase
costs.
Zonda’s 2Q24 DFW Market Update, presented by Bryan Glasshagel, Senior Vice President, offers a comprehensive view of the housing market in the DFW region. One of the significant highlights is the stabilization of mortgage rates. After a period of elevated rates, a decline of approximately 20% from their peak is observed, with future cuts expected to bring rates down to 5.9%-6.1% by the end of 2025. This trend is crucial for both buyers and builders, as it influences affordability and market activity.
The report also highlights mixed impacts on business due to these changing rates. While 43% of respondents reported no impact, 29% saw increased consumer activity. Despite a slowing employment growth rate in Texas, the job market remains relatively stable with low initial unemployment claims, indicating a resilient economy.
In terms of housing demand, new home starts and closings have normalized, capturing 29% of total closings in 2024. However, monthly new home contract sales have slowed since April. Notably, start activity is up year-over-year across most price segments, particularly in the $300k-$399k and $500k-$749k ranges.
On the supply side, project counts in the DFW metroplex are increasing, with 295 new projects opened versus 227 sold out in the past 12 months. Despite a balanced vacant developed lot supply, lot deliveries are slowing, yet they still outpace start activity.
Zillow’s presentation by Scott Rohrig, Director of Industry Relations New Construction, on Consumer Insights and Buyer Behavior in New Construction offers a deep dive into the preferences and behaviors of today’s homebuyers. According to Zillow’s New Construction Consumer Housing Trends Report 2024, 42% of buyers are exclusively interested in new construction homes, a trend that has grown over the past three years. This preference underscores the importance of features unique to new construction, such as smart home technology and community amenities.
Budget considerations remain paramount, with 89% of new construction buyers emphasizing the importance of staying within their initial budget. Financial incentives, like rate buydowns, are becoming critical in attracting buyers amidst high mortgage rates.
Smart home capabilities are increasingly valued, with 63% of buyers considering them highly important, a 29-percentage point increase since 2019. Security features, thermostats, and other tech add significant value, making new homes more appealing compared to existing ones.
The report also highlights the influence of pets and family needs on buying decisions. Nearly 75% of new construction buyers have pets, making pet-friendly features a key selling point. Kid-friendly amenities, such as playgrounds and community parks, also add considerable appeal.
Digital tools are no longer optional but essential. Features such as 3D tours, interactive floor plans and virtual staging help buyers visualize and understand homes better, increasing the likelihood of purchase. These tools have seen a significant rise in demand, with 72% of buyers wishing more listings offered 3D tours, up from 60% in 2020.
All presentations at the Summit emphasized the ongoing challenges in the housing market, including high-interest rates and affordability issues. However, they also highlight significant opportunities. The preference for new construction homes is rising, driven by unique features, digital conveniences, and financial incentives that older homes can’t match.
For builders and developers, the key takeaway is to stay attuned to consumer preferences. The DFW market, with its stabilizing mortgage rates and resilient economy, presents a promising landscape for new construction. As the housing market continues to evolve, the insights provided by the Association’s State of the Industry Summit speakers will be invaluable for industry stakeholders looking to navigate the complexities and capitalize on emerging trends in new construction.
Top Photo: Bryan Glashagel, Senior VP of Zonda; Dallas BA President Adam Lingenfelter; Summit Title Partner representative Jessica Goehring, Hotchkiss Insurance Agency; Scott Norman, TAB Executive Officer; and Scott Rohrig, Director, Industry Relations, New Construction of Zillow Group