New Home Sales Balancing Houston Foreclosures

by on cities

The second quarter of 2010 saw the new housing market of Houston, Texas gaining momentum as home buyers and home builders both take advantage of the federal tax credit. This is good news for the area which is still reeling from the thousands of Houston foreclosures that have caused the decline of property values in the past couple of years.

The problem of Texas foreclosures seemed to be abating faster than other states in the U.S. Several cities and counties in Texas are recording improving housing market numbers, with Houston being one of them. The city's housing starts recorded a 20% jump in the second quarter of the year.

Despite the presence of a big number of foreclosed houses, including JP Morgan Chase homes for sale, new homes held their own for the third consecutive quarter, according to a report from Metrostudy. The residential consulting firm also reported that the number of residential property closings also rose during the second quarter.

The sale of new dwellings and even homes for sale foreclosures experienced a sudden drop right after the April 30 deadline for the tax credit. However, local housing market analysts have stated that activity in the new home building market, particularly among single family homes, has picked up in the past few weeks.

The impact of Houston foreclosures can still be felt in the smaller townhouse sector, though. The Metrostudy report showed that home starts in this category declined by 16% compared with 2009. When compared with the 2006 market peak, the decline is over 70%. Despite this decline, inventory levels for townhouses remain lower in 2010 compared with the previous year.

Based on sales activities, the current inventory for townhomes will require 10.9 months to be sold off, while the previous year's levels required 14.8 months before the inventory is cleared off. When it comes to single family dwellings, inventory currently stands at about 6.5 months. Analysts have claimed though, that the two segments cannot be compared as townhouses are built in clusters and most of the units are not pre-sold when construction starts.

The good thing about single family dwellings is that their prices did not decline as much as the values of townhouses. Despite Houston foreclosures issues, single family residences' prices remain almost the same; not rising but also not dipping drastically.

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