Houston’s Construction Market Drops From No. 1

by James McClister


Twelve months ago, residential construction in Houston was booming. Since 2009, the city has been widely recognized as the nation’s busiest metro market for home construction. However, after a 50 percent dip in oil prices, the city has slipped from the top of the list.

At the end of July, we reported that residential construction in the Bayou City was down 10 percent year-over-year, and up only 1 percent year-to-date, putting the pace of building behind more active markets like Atlanta and Chicago. And with spending that has been cut significantly, coupled with a floundering energy market and poor job growth, which has dropped from 3.4 percent in 2013 to 1.9 percent in 2014, builders are only decreasing their efforts.

During the first six months of 2015, residential permit gains have inched up only 2.4 percent, compared to a more robust New York market, where building permits were up nearly 150 percent.

Last week, homebuilder Ryland Group, which has a big presence in the Houston market, released its second-quester sales, revealing a 14 percent decline. The company’s chief executive Larry Nicholson, while acknowledging the dip, added a bit of a silver lining, saying that Houston’s market is now rebounding from the fall.

“Above the $350,000 price point, there is a lot of softness in the market,” he said. “Below that, the activity still is strong. But we do feel that market is moving in a (good) direction.”

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