Central Texas builders slash new-home starts amid national mortgage shakeout
Austin market is healthy, but builders are being conservative
AMERICAN-STATESMAN STAFF
Thursday, April 05, 2007
The subprime mortgage shakeout is being felt in Austin, as builders cut new home starts by nearly 28 percent in the first quarter compared with a year ago, according to a report from Residential Strategies Inc.
The Austin market is healthy, but as lenders tighten credit requirements, some buyers will not be able to get mortgages, said Mark Sprague, head of Residential Strategies' Austin office.
"The large-production builders are battling inventory issues elsewhere in the country, and are thus conservative right now," Sprague said. "Moreover, with the rules being changed today regarding mortgage qualifications, builders are being careful until they can determine the extent of the fallout."
Subprime lenders specialize in loans to people with risky credit or first-time buyers who don't have a long credit history. Many of those lenders have curtailed lending or shut down in recent months, because high mortgage defaults in many parts of the country led their investors to cut off money.
Austin is one of the few exceptions to a slowing housing market.
As one measure of the strong demand here, builders closed on a record 16,249 homes in the first quarter, up 4.3 percent from the first quarter of 2006.
But they started work on only 3,327 houses, down from 4,613 a year ago, which was a record.
On an annual basis, they started 15,468 homes in the 12 months that ended in March, down 4.3 percent from the year-earlier period.
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