A Bountiful Harvest Awaits

Strong first-half sales means we can expect a bumper crop of new home owners this fall. Yet we’ve reached new levels of unsold spec inventory. Will demand hold strong enough to absorb the new homes we’ve “seeded?”  

So far, so good. Based on builder reports, we estimate that builders in the Greater Austin area achieved approximately 1,401 gross and 1,031 net new home sales during the month of August. (The 28 homebuilders surveyed in this report account for approximately 84% of the new single-family housing activity in the Austin market, based on Metrostudy 1Q17 closing data.)

Sales Offices and Onsite Traffic

Model performance dipped a bit in August. The average model saw 29.9 units of traffic, down from 36.4 in July. The total sales office count remained slightly below 2016 numbers for the third month in a row.

Model home performance varied greatly by price segment, however. In August, participating builders who primarily serve the sub-$300K price point saw much higher traffic counts than those who are primarily mid-range or luxury-focused.

Builder Segment Average Model Count Average Traffic August Traffic

Per Model

Value (< $300K base) 18 628 35
Mid-Range (Base $300K-$400K) 11 311 28
Luxury (Base > $400K) 13 307 24

Builders reported a substantial dip in traffic numbers in August. The bump we experienced from June-July slid into a trough. Traffic numbers dropped 17% Month Over Month (MOM) and 15% Year Over Year (YOY). Those were the lowest traffic numbers we’ve seen since December 2016.

Gross and Net Sales

Though both Gross and Net Sales dropped MOM—by 10% and 15% respectively—we continue to outperform 2016. Gross sales rose 5% YOY, and Net Sales jumped 6% over the previous year. The Realtor co-op percentage held steady at 80%.


As with traffic, performance varied based on predominant price segment.   Builders who serve primarily sub-$300K home buyers saw 3.2 net sales per model during the month of August as compared to 1.6 net sales for mid-range and 1.5 net sales for luxury production builders.


New Home Inventory

After the recent high of over 3,000 homes reported as Under Construction in July, we saw construction ease a bit in August. The slowdown was deeper compared to previous years, but we still have 531 more homes underway than in August 2016.

Based on the current Net Sales pace, Builders in this report have 3.91 Months of Supply (MOS). Supply continues to grow and at some point may exceed demand. (However, remember that, based on strong spring sales, quite a bit of this inventory is likely pre-sold.)

In addition, we continue to watch the level of unsold Finished Vacant Inventory.  That number continues to grow, as it has since May. From July to August, Finished Vacant Inventory increased 19% and August numbers are 70% higher than they were a year ago. (Wow!) There are 404 more unsold completed homes on the ground than there were a year ago.

Finished Vacant supply now stands at 13.9 MOS. We are seeing significant incentives to move standing inventory, especially in upper price points.

Home Shopper Performance

The anticipated uptick in Cancellations finally hit in August, when we surged nearly 5 points to a 26.4% percentage rate. July and August tend to have higher “can” rates associated with builders’ sales incentives to move spec inventory before the seasonal drop-off.

The capture rate for new sales held fairly steady, at 7.8%. Interestingly, our August data indicates that builders in value price segments (below $300K) actually convert more shoppers.   The average for that segment is 9% conversion, vs. 6% conversion for mid-range and luxury segments. These higher-income buyers have more choices and perhaps less incentive to move.

Information Provided by:

Vaike O’Grady, Austin Regional Director, 512-827-6344 or vogrady@metrostudy.com.

About Metrostudy Metrostudy is the leading provider of primary and secondary market information to the housing and related industries nationwide. We are recognized for our consulting expertise on development, marketing, and economic issues, and we provide research studies evaluating the marketability of residential and commercial real estate projects.

Data compiled by Metrostudy. All data has been reported by the participating members of this survey and can be subject to change.