As Houston, Texas, continues to recover from last year’s hurricane season, it continues to lead the nation as one of the top housing markets.

In late August, Hurricane Harvey tied with Hurricane Katrina to become the costliest tropical cyclone on record. Harvey inflicted $125 billion in damage to the Houston area as it produced major flooding across the metro.

The category 4 storm caused at least 107 confirmed deaths in addition to the widespread structural damage.

Immediately following the hurricane, mortgage delinquencies in the area climbed 16% in the impacted areas, an analysis by Black Knight showed.

The nation stepped in to help as Fannie Mae and Freddie Mac suspended foreclosures and evictions in the area and the Consumer Financial Protection Bureau encouraged financial institutions to help in relief efforts. #HoustonStrong trended on social media sites and even the Dallas Cowboys agreed to cancel their final preseason game with the Houston Texans to allow them to return home and be with their families.

But even still Houston residents struggled as the majority were uninsured against flooding, and faced billions in damages.

But even after all of the storm-related destruction, a new report from Metrostudy for the 12 months ending in the first quarter of 2018 reveals that Houston remained the second highest volume for new home market in the U.S., just beaten by Dallas in number of new home starts.

Houston had 27,675 housing starts in the first quarter, an increased of 7.5%, or 1,927 starts year-over-year. What’s more, Metrostudy predicted starts will continue to grow, rising about 3% to 4% annually by the conclusion of 2018.

The study showed volume growth in 2017 was driven by builders and developers increasingly offering a wider product offering including a greater share of more moderately priced attainable product, about $300,000 and below.

However, the lingering effects of the hurricane are creating a drag on the new construction market as shortages of specialty trade labor are adding about four to eight weeks to cycle times.

New home starts were the highest in the $200,000 to $299,000 range, showing the market continues to focus on bringing more affordable homes to the market. But the starts volume in homes priced $300,000 to $399,000 saw the strongest growth, rising 14% from last year.

The sweet spot in the Houston housing market lingers between $200,000 and $400,000, however, even homes priced at $400,000 to $499,000 and $500,000 to $599,000 saw increases, rising 8.7% and 0.9% annually, respectively.

“In the first quarter of 2018, the number of new lots delivered (5,130) significantly undershot the number of lots absorbed via new home starts (6,693),” said Lawrence Dean, Metrostudy regional director of Houston market. “This represents the fifth quarter in a row of low lot delivery numbers relative to lot absorption.”

“The Houston industry is anxious about the impact of announced and planned changes to land development regulations by the City of Houston, Harris County, and suburban counties,” Dean said. “The anxiety centers on the potential for delays in lot delivery due to these changes, in an already lot tight market.”

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