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Recovery Chugs Along in Dallas-Fort Worth Despite Setbacks

The new home market in the Dallas-Fort Worth (DFW) Metroplex continued to see rapid growth in the second quarter, according to a report from ""Metrostudy"":http://www.metrostudy.com/, a ""Hanley Wood"":http://www.hanleywood.com/ company.

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""Homebuilders continued to report strong year-over-year gains in net sales during the quarter. Builders responded by starting more new homes during the second quarter than any time during the last five years,"" said David Brown, regional director of Metrostudy's DFW office.

New home starts surged 32 percent over the quarter, rising the most among houses priced above $300,000. According to Brown, homebuilders are expected to start 22,000 homes in DFW this year.

While starts were up, finished new home inventory was down 20 percent during Q2. As of the end of the quarter, finished vacant inventory was down to a 20-year low, representing only a 1.7 month supply--well below the two-month supply considered to be equilibrium.

With demand remaining strong and inventory down, Metrostudy reports some communities in the Metroplex have seen prices rise 10 to 20 percent or more during the first half of 2013. At the same time, however, higher interest rates are expected to slow the rate of price gains in coming quarters.

""Buyer's purchasing power has weakened somewhat in the past two months and will further erode if mortgage rates continue to rise,"" Brown said.

Metrostudy also noted that new lot deliveries remained well below the starts pace during the second quarter, causing the lot supply to fall. While total lot inventory represents a 29-month supply, the most active subdivisions (which account for 75 percent of new home demand) have a restricted 15-month supply (equilibrium is considered to be in the 20- to 24-month range).

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