LOCAL ECONOMIC SNAPSHOT | NEW-HOME MARKET

Building industry coming back

By STEVE BROWN
Real Estate Editor stevebrown@dallasnews.com

With housing starts off by more than two-thirds in the last five years, the North Texas homebuilding industry has been one of the hardest-hit sectors of the local economy. More than 40 production homebuilders doing business in the Dallas-Fort Worth area shut down operations during the downturn. As sales improve, the ranks of local builders are starting to grow again.

Brad Loper/Staff Photographer

D-FW top homebuilders

Ranked by home starts for the year:

The top 10 in 2006

In 2006 before the recession hit, all of the top 10 homebuilders in North Texas started more than 1,000 homes. Homebuilder D.R. Horton Centex Lennar Homes Highland-Huntington Meritage-Monterey First Texas Homes K. Hovnanian David Weekley Choice Homes Pulte Homes
SOURCE: Residential Strategies Inc.

The top 10 in 2011

Only one North Texas homebuilder, D.R. Horton, started more than 1,000 homes last year. Homebuilder 4,840 3,043 2,838 2,212 1,582 1,506 1,432 1,383 1,312 1,269 D.R. Horton Pulte-Centex First Texas-Gallery Custom Homes Highland-Huntington-Horizon-Sanders Meritage-Monterey K. Hovnanian Grand Homes Lennar Homes Bloomfield Homes History Maker-Rendition Homes Housing starts 1,950 812 793 754 530 426 368 356 325 322

Housing starts

Homebuilders
Heres a look at the number of production homebuilders in North Texas who build at least 50 homes a year. After falling by more than half, during the recession, the number of Dallas-Fort Worth-area homebuilders is slowly rising.
80 70 60 50 40 30 20 10 0

Dallas-Fort Worth new-home activity

North Texas new-home sales and starts were both up in the first quarter from a year earlier after several years of declines. Housing production in the D-FW area is still more than 70 percent below the peak in 2006.
(In thousands) 15

Starts

Sales

First quarter, 2012: 45

12 9 6 3

First quarter, 2012 sales: 3,327

First quarter, 2012 starts: 3,192

0 04 05 06 07 08 09 10 11 12 04 05 06 07 08 09 10 11 12

SOURCE: Residential Strategies Inc.

SOURCE: Metrostudy Inc.

The bottom line

The fallout of builders ranged from glaring bankruptcies to consolidation to builders leaving the market, builders closing their doors to builders shrinking under the 50-start threshold. Those that stayed in business had massive layoffs. It was typical to see workforces reduced by 50 percent to 75 percent. Many talented people that were casualties of the downsizing trend have now started up new companies. The homebuilders in business in the Dallas-Fort Worth market today are in much stronger condition than a couple of years ago. These companies spent the last few years repositioning their organizations to be profitable at the reduced starts pace today, which is more than 70 percent below the peak. They have also focused their building activities in their betterperforming locations, moving out of underperforming locations. The Dallas-Fort Worth homebuilding companies that stuck it out through the Great Recession are true survivors. In many cases, they have drastically changed their business models to compete in a new market that has been dominated by bargain-price, preowned home sales. Look for more start-up builders as the economy improves.

Ted Wilson, principal, Residential Strategies Inc.

David Brown, D-FW Director, Metrostudy Inc.

Steve Brown, Real Estate Editor, The Dallas Morning News