New home sales up in Austin region in May, but outlook for the year dims

Sales of new homes in the Austin area ticked up 4.1% in May compared with April, new figures show.

But as builders struggle to move inventory in the face of higher interest rates, a rising supply of newly constructed homes is dimming the outlook for the rest of the year. That's according to the latest monthly report from Ben Caballero's HomesUSA.com , which tracks the new-home market in Texas, including the five-county Austin region.

More: Austin housing market crystal ball: See what some experts predict for 2024

Caballero, a top-ranked real estate agent, is founder and CEO of HomesUSA.com. He compiles his report using Multiple Listing Service data from the Realtor associations in Texas' four largest metros — Austin, Houston, North Texas (Dallas-Fort Worth) and San Antonio.

New-home sales in the Austin area were the lowest of Texas’ four largest metros, Caballero said. According to his three-month moving average, which tracks market seasonality, the Austin region had 955 sales in May, up from 917 in April.

Despite May's month-over-month increase, Caballero is concerned about signals that he says are “dimming the prospects” as new-home inventory continues to build.

Pending sales flat

“While Austin new-home sales were slightly higher in May, their moderate seasonal strength does not bode well for the rest of 2024,” Caballero said. “Pending sales numbers — an indicator of future sales — are flat and are confirming my concern.”

More: Economic headwinds holding back seasonal new-home sales in Austin market, expert says.

The Austin region's three-month average of pending new-home sales for May was 1,370, down from 1,399 in April, Caballero's numbers show.

Inventory challenges

“Moreover, active listings of new homes are up nearly 9% year-over-year in May as Austin builders struggle to move inventory in the face of higher interest rates,” Caballero said.

May's new-home supply also was up from April, with the three-month moving average of active listings totaling 5,789, up from 5,701 in April.

“Local builders are working hard to reduce that inventory,” Caballero said. “Based on the pending and active sales numbers posted last month, new home sales' long-term outlook would be worse if it were not for the underlying strength of Austin’s economy."

Prices easing some

Austin-area homebuyers paid a little less for a new home in May: The average three-month price was $520,281, compared with $522,799 in April.

Elsewhere in Texas

As in the Austin region, new-home sales ticked higher in Texas' three other major metros in May compared with April, Caballero said.

May's three-month moving average of new-home sales in Dallas-Fort Worth was 1,986, up from 1,892 in April. In Houston, May’s moving average showed 2,093 sales, up from 2,036 in April. And in San Antonio, May's moving average totaled 1,073 sales, up from 1,054 in April.

But unlike Austin, the three-month moving average price for new homes in May increased in Texas' three other largest markets.

In Dallas-Fort Worth, it came in at $486,197, up from April's $475,516. In Houston, it was $411,767, up from $405,602 in April. And San Antonio's three-month average new-home price was $353,388 in May, up from April's $348,830.

This article originally appeared on Austin American-Statesman: New home sales up in Austin region in May, but outlook for the year dims