Solving its inventory crisis

Texas’ inventory shortages won’t be around much longer if the state keeps up its crazy-fast home building pace. The state is currently blowing past the rest of the country in homebuilding, with only three Texas markets – Dallas, Houston, and Austin – on pace to make up more than 10% of all permits in the U.S.

That’s a lot of new homes.

According to a new report from Trulia that breaks down the nation’s homebuilding numbers, the three cities are on pace to build nearly 130,000 new homes in 2017. The permits for the three cities make up nearly as much as 50 other large U.S. metros combined.

The chart below from Trulia compares the three Texas housing markets to other top metros.

Ralph McLaughlin, Trulia chief economist, explained what the growth means for the cities, stating,  “We think the building boom in Austin and Dallas is healthy and welcomed, given the meteoric rise in prices and decrease in affordability we’ve seen over the past year. Massive homebuilding in Houston, on the other hand, may exacerbate the recent cooling in home prices.”

“We can’t say for certain, but at this pace, we would expect new housing construction at these high levels to make a noticeable increase on existing inventory in one to two years in constrained Austin and Dallas, and maybe less in a cooling Houston market,” said McLaughlin.

This is welcomed news for the state since, much like the rest of the country, it has been struggling with a lack of housing inventory.

Earlier this year, the Texas Association of Realtors forecasted that Texas housing in 2017 wouldn’t be quite as rosy as the previous years, due to decreasing inventory, as well as those rising prices, and the state’s rapidly rising property taxes, which are significantly impacting affordability in the state.

But looking at this new Trulia report, things are starting to look up for the state. When it comes to sheer homebuilding activity, the Dallas and Houston metro areas are the top contenders to win this year’s homebuilding gold medal, Trulia stated.

Dallas is the No. 1 homebuilding market in the country, with nearly 49,000 projected permits. Houston is a close second at nearly 48,000 permits.