The New Home Industry Is A Vital Part Of The US Economy 

The sector breakdown of the housing industry has notably changed over the past two decades. New homebuilding represented 16% of overall housing transactions in the early- and mid-2000s, but today, it comprises 12%. How does this trend vary over time and market?

• New home buyers are estimated to spend 10% more on appliances, furnishings, and property repairs and alterations compared to those purchasing an existing home.
• In addition, it is calculated that for every 1,000 average single-family homes built, 2,975 jobs are created. This is considerably higher than the 500 jobs attributed to 1,000 existing home sales and is spread across more specialties, including land development, private equity, banking, construction, government, and architecture.

• New home sales are approaching 30% of the market in Austin and Raleigh. 
• The top ten markets with the largest new home share are in Texas or the Southeast. Las Vegas is the exception.
• Of all the top US markets, the ones with the biggest change compared to 2006 are Las Vegas (down 27%), Miami (-22%), Phoenix (-19%), Riverside (-19%), and San Diego (-18%). The markets with the smallest change are Austin (flat), Salt Lake City (-1%), and Baltimore (-3%). 
• Among top markets, the share only increased compared to 2010 in Austin, Dallas, Salt Lake City, and Denver.

1. Transportation. Even before Austin landed as the second-highest market in the country for in-migration, Williamson County officials were hard at work on infrastructure. As a result, the city’s transportation network makes it appealing to those looking to live outside the central business district. The red line train combined with the 183 and 130 toll roads links Williamson County to downtown in less than an hour.
2. Land. Unlike relatively close-in suburbs of other major cities, Williamson County still has land available and new lots coming online. The access to land allows the price to be considerably lower than other parts of the metro. In fact, home prices in the outlying counties are $100K+ cheaper than in the City of Austin according to Zonda. 
3. Employment. Roughly 1.5 million of the 6 million square feet of commercial space that is under construction in Austin is located north of the City. This movement northward by employers makes sense because of the cheaper rents and access to workers. Large employers like HomeAway, Indeed, Facebook, and Amazon have a significant presence at The Domain, and Apple’s new campus just broke ground in Williamson County in late November.

The challenge for Austin, like the rest of the country, is how do builders attract individuals away from the rental market by offering something compelling and reasonably priced. While developers and builders have been working to downsize lots and home offerings in order to contain prices, cost pressures call for more creativity.

In Austin’s case, only 10% of new home closings are attached, and most of those are downtown. Working through different well-executed density solutions can help local builders gain a foothold in the market.