Austin Homebuilders Struggle to Catch Up with Soaring Demand

Jul 18, 2016

Austin is building new homes at more than twice the rate of the U.S. as a whole. Still, analysts say builders are struggling to catch up to the growing demand of homebuyers. 


Even at more than twice the national rate, analysts say Austin is not overbuilding new homes. Tim Sullivan of Meyers Research gave a mid-year update on the city’s housing market at an event hosted by the Home Builders Association of Greater Austin.

“We’ve had population growth, we’ve had job growth, we’ve had good income increases, and the demand has been effectively real,” Sullivan said.

But, Sullivan says, Austin is facing a unique challenge when it comes to affordability. According to his data, the median price for a new home in Austin is only 5 percent more than that of an existing – or resale – home. In other markets, resale homes are significantly more affordable.

But that’s not the case in Austin. 

Credit Meyers Research

Compare that to Denver which has a 27 percent gap between the median pricing of new and existing homes. 

Credit Meyers Research

And Dallas, which has a gap of 46 percent. 

Credit Meyers Research

“Typically, new is better,” Sullivan says. “You’ve got newer product, you’ve got newer appliances; your house is energy efficient. But with the resale market being so close in price, the competition that resales give to us locally is more significant.”

Some say Austin is on track to building a more diverse housing inventory. Eldon Rude is principal of 360 Real Estate Analytics. He says for several years, local builders been playing catch-up, trying to meet the soaring demand for single-family homes.

“I would anticipate that, because of that, we begin to see kind of a moderation in terms of the price increases that we’ve seen over the last couple of years, because we’re finally beginning to catch up a little bit in terms of supply,” he says, adding that expects the current price crunch to ease off in the coming years as housing supply catches up with demand.

You can view Meyers Research's mid-year update on the Austin real estate market below: