Denton County home construction pushed higher at the end of 2017, with the number of new homes on the market up over 16 percent. That figure is likely even higher since some new home construction is intentionally left out of the multiple listing service by home builders to avoid spooking potential home buyers with any obvious inventory gluts.

Recent numbers from Dallas-based Residential Strategies showed construction starts in the DFW area up 20 percent in the fourth quarter of 2017. The increase in construction is a welcome sign, particularly since resale home inventory continues to be extremely low. There was only 1.4 months of supply for resale homes in Denton County at the start of the year, vs over 4 months of supply for new construction in Denton County.

The tight supply of homes in general has enabled homebuilders to keep pushing forward with starts. Low inventory levels have also supported continued price increases for local homes. That being said, there is a definite shift toward more moderately priced homes in both the DFW area and Denton County. Homes priced below $500,000 are getting the most attention, not surprising since consumers continue to get squeezed from both ends.

The home purchase market in Denton County remains tighter than the single-family lease market. That will likely remain the case for the time being. 2018 should be interesting¬† in terms of the level of new home sales in Denton County as well as overall pricing. There is a lot riding on the Fed’s potential balance sheet unwind and the last 8 years of an artificially levitated stock market.

It is worth noting that even though the DFW area is building about a third fewer new homes than the peak seen prior to the Great Recession, the dollar value of the new construction starts is actually higher today. Contrary to local economists who will tout the strength of the Dallas area economy, that statistic is more a reflection of the Fed’s asset reflation experiment.