Seeking to lure first-time buyers, Lennar joins lower-price fray
Lennar, one of Houston's largest homebuilders, has launched a line of communities that aims to offer new houses in an increasingly rare affordable price segment serving first-time buyers.
Wayside Village, on Wayside Drive just south of Little York in northeast Houston, will have 64 homes starting in the mid $100,000s. Lennar has acquired 15 acres as the site of its first in nuHome product in Houston, with others planned later this year.
While new home starts in the Houston area rose 10% to more than 30,000 in 2018, activity in the segment priced below $200,000 fell by 26%, according to Metrostudy, a housing data and consulting firm.
About 2,950, or 10%, of the houses started in 2018 were priced below $200,000. In 2006, two-thirds of new houses in the Houston market sold for less than $200,000.
"There's plenty of demand for homes at that price," said Lawrence Dean, Houston regional director for Metrostudy. "It is a shrinking part of the market. That is a supply condition, not a demand condition."
With rising land, labor and materials costs, builders have had to scale back houses to between 1,200 and 1,600 square feet on 40-foot lots, rather than 50-foot lots, to lower the price, Lawrence said. They also save by developing their own lots rather than buying from a developer.
Centex, a division of PulteGroup, and Express, part of D.R. Horton, are among the area builders that offer homes below $200,000 in the market, Lawrence said.
John Hammond, Houston division president of Lennar, said the nuHome communities will meet pent-up demand for affordable new homes starting in the mid-$100,000s.
"It's all about making it easier to purchase a new home for families of all sizes who otherwise were limited to rent or resell residences," Hammond said in an announcement.
The new offering has six home plans, ranging from 1,174 to 2,229 square feet, with open-concept kitchens and adjoining breakfast rooms, spacious family rooms, first-floor masters and two-car garages. Prices range from $161,990 to $199,990, according to Lennar. The starting prices shaves about $18,000 off the price of the Miami-based builder's next-least expensive houses in the local market.
The $200,000 threshold is also hard to break in the local resale market. Existing homes sold for a median price of $217,500 in March, up 1.8% from a year earlier, according to the Houston Association of Realtors.
The initiative to offer lower-priced new homes comes as owning a home is becoming more difficult. Harris County is among 65% of the nation's markets where home prices are less affordable than a year ago, according to a first-quarter study by Attom Data Solutions. Others include counties covering Los Angeles, Phoenix and San Diego.