DALLAS — Editor's note: This article originally appeared in the Dallas Business Journal.
Seven months into the year, new houses are popping up like bluebonnets after a springtime rain in the Collin County cities of Celina and Princeton.
But new home construction has stagnated or tumbled in most other cities north of Dallas and Fort Worth, according to the latest roundup of single-family building permits in Collin, Denton and Grayson counties.
The number of new home building permits issued through July 31 has soared 36% this year in Celina and 31% in Princeton, according to data compiled by Addison-based Tomlin Investments.
An eye-popping 1,446 permits have been handed out so far this year in Celina, up from 1,067 in the Jan. 1 through July 31 timeframe of 2022. The city of Princeton has issued permits for 914 single-family homes so far this year, up from 698 in the first seven months of last year.
And single-family residential building permits are up 47% in the Grayson County city of Sherman, where Texas Instruments and GlobiTech Inc. are building massive semiconductor chip manufacturing plants expected to provide a combined 4,500 jobs over the next several years. Sherman has issued 484 single-family building permits year-to-date compared to 329 in the same period last year. The city of Sherman’s development plan calls for 8,000 new single-family homes over the next five to 10 years, plus 10,000 multifamily units, as homebuilders and developers look to build housing for the new employees of the emerging semiconductor corridor.
Meanwhile, home permits have fallen 32% in once mighty Frisco and 23% in previously red-hot Prosper. In real numbers, 636 permits have been issued year-to-date in Frisco compared to 941 in the same period last year. Prosper’s permit count has plunged to 495 in 2023 vs. 643 in January through July of 2022.
Permits in Little Elm fell even further, diving 49% to 403 this year compared to 783 in January-July 2022. Denton is down 19%, with 625 permits this year; Melissa is off 7%, with 588 permits so far; and Anna is essentially flat with 635 homes permitted thus far in 2023.
New home prices and sales across DFW robust
Zooming out to the broader DFW area, the new home market is relatively robust, with sales near a three-year high and new house prices close to their all-time peak, despite the rapid run-up in mortgage rates that began in early 2022.
In Dallas-Fort Worth, last month's three-month moving average new home price in July was $499,115 vs. $493,647 in June and $492,762 in May, according to the HomesUSA.com New Home Sales Report.
“For the past year, new home prices have been flat to slightly down but remain close to their all-time peak,” said Ben Caballero, CEO of Dallas-based HomesUSA and author of the report.
“It takes months to plan, build and deliver new homes and two years for developers to deliver building sites, during which time interest rates and government policy can change,” Caballero added. “Because of the strong growth in the Dallas-Fort Worth area, it is vital that builders continue to generate more inventory, and they are doing their jobs well despite all of the challenges in the market today.”
The three-month moving average of new home MLS sales in Dallas-Fort Worth for July was 1,975, compared to 2,097 new homes sold in June.
“New home sales in the Dallas-Fort area are healthy as new home supply and demand continues to move towards a balance that is good for builders and buyers alike,” Caballero said.
He predicted, however, that seasonal cycles will likely push sales lower in the coming months.
Pending new home sales in DFW — an indicator of what lies ahead — were down slightly last month. The three-month moving average of pending new home sales in July regionally was 2,372 vs. 2,531 in June.
“I see listings trending lower to flat and continuing to remain there for a few months," Caballero said, "depending on what interest rates do.”
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