Metrostudy: ‘We didn’t see the drop off of home starts’ in Houston area during COVID-19

home construction
The Houston regional director of Metrostudy, a residential market research consulting company, discussed home start data during the coronavirus pandemic. (Dourtesy Pexels)

The Houston regional director of Metrostudy, a residential market research consulting company, discussed home start data during the coronavirus pandemic. (Dourtesy Pexels)

In mid-March, Lawrence Dean—the Houston regional director of Metrostudy, a residential market research consulting company—feared the worst for the residential real estate market.

“In the first three to four weeks of the coronavirus pandemic, right after the Houston Rodeo canceled its events, home sales and starts were in free fall,” Dean said. “Everyone was staying home—builders, buyers, developers. There was tremendous concern because nothing like this had ever happened before.”

In a May presentation based on first-quarter data, Metrostudy projected annual home starts in the Greater Houston area would total 24,050—nearly 6,500 fewer starts than in 2019, or a 21.4% year-over-year decline.

But based on preliminary data for the second quarter, Dean said he now predicts 2020 annual home starts to equal 2019 or reflect only a slight year-over-year decrease.

“We didn’t see the drop off of home starts that I thought we would see because of COVID-19,” he said.


Between January-March, there were a total of 8,403 home starts across the Greater Houston area, about a 21% increase compared to January-March of 2019, per Metrostudy data. And between April-June, there were 7,644 new home starts, which represents a 3% increase versus 2019 second-quarter data, Dean said.

Homebuilders experienced record sales in the month of May, he added. June sales also performed well.

However, whether home starts and new home sales will continue this performance throughout 2020 depends on five factors, he said.

  • Interest rates: Interest rates are low and are unlikely to increase in the near future because of the economy, Dean said. This will help homebuying activity.

  • Job losses: The vast majority of job losses in the Greater Houston area—similar to the nation—have occurred mostly in the restaurant industry, retail and health care, Dean said. Of those, more employees in the health care industry make enough income to purchase a new home, so the overall number of people who can buy a new home has not declined too much so far.

  • Oil prices: If the price of oil does not increase, Houston-area energy companies may issue additional layoffs, and fewer individuals and families would be able to afford new homes, he said. This decreased consumer demand would slow sales and home starts.

  • Supply condition: Homebuilders paused on buying new properties for several weeks in March and April, Dean said. So at the end of 2020, the Greater Houston area may not have enough properties to build on for demand, and a slowdown would occur.

  • Coronavirus pandemic: The ambiguity around the virus and its spread is a factor that negatively affects homebuilding and buying, he said. “We truly don’t know what’s happening with COVID-19,” Dean said.

By Jen Para
Jen joined Community Impact Newspaper in fall 2018 as the editor of the Katy edition. She covers education, transportation, local government, business and development in the Katy area.


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