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New home prices may level off in Central Texas, experts say

Home industry experts say new home construction in the Centra Texas area is approaching its peak.

AUSTIN — Statistics show about 100 people a day are moving into the Austin area, and that has builders putting up homes as fast as they can.

The Home Builders Association of Greater Austin said the number of new home construction is close to it's peak, and said the prices of those new homes should start to level off.

“As we look forward into 2018, and into 2019, I think we can expect things to slow down a bit. Prices have been escalating very quickly for such a long time that they’re probably going to level off, but at the same time there’s still pressure on margins for builders to build homes, it’s more to cost purchase land, it’s more cost to build homes, so that’s going to be some pressure for builders going forward,” said Viake O’Grady with Metrostudy.

That’s forcing builders to build further outside of Austin.

“While we’ve seen the resale market continue to escalate in pricing, new home builders have done a pretty good job of keeping pricing level, and the way they’ve been able to do that is move further out, they’re building smaller homes on smaller lots,” said O’Grady. “There’s really no pressure to drive prices downward. I expect pricing to stay fairly flat going forward, from a new home perspective, because we’re building further out in order to meet those buyers' needs.”

According to Metrostudy, builders have started on more than 16,000 homes in the past 12 months. That's close to the peak of 18,000 in 2006.

They also said people have closed on more than 16,000 new homes in the past year, which is right at the peak from 2007.

“If you're looking to purchase a home right now, unless you have significant wherewithal, you're really going to need to look further out, and you might be prepared to make some compromises in terms of lot size and home size,” said O’Grady.

Michael Tyson moved to Austin from Washington, D.C., late last year and said he was surprised by the number of new builds.

"We didn't really consider that at first. Once we actually saw the neighborhoods, and saw some of the fully built new houses, we were really swayed to go that way as opposed to buying an older house,” said Tyson.

According to HBA, the top markets for new homes outside of Austin are Pflugerville, Kyle/Buda, and Cedar Park/Leander -- each with more than 1,200 new home build starts in the past 12 months.

Including model homes, homes currently under construction, and finished vacant homes, HBA said there are almost 11,000 new build homes on the market right now. They said that's been the case for the past five quarters.

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