D-FW homebuilding activity slows this spring amid persistent high mortgage rates.

Homebuilding activities in North Texas experienced a notable decline in the second quarter of 2026, reflecting a 6.5% decrease compared to the previous year. This information comes from a comprehensive report by Residential Strategies Inc., a Dallas-based market research firm, which highlighted various economic pressures influencing the housing market.

During the second quarter, traditionally one of the strongest periods for new home construction, builders commenced work on 11,290 residential units. While this figure represents an improvement over the preceding quarter’s 11,149 units, it nonetheless reflects a year-over-year decline. Total housing starts for the last four quarters have also diminished, totaling 39,962 units, marking an 11.7% decrease from the previous year.

Market analysts have attributed much of this slowdown to elevated mortgage rates, which have remained a critical factor in shaping buyer behavior. In this quarter, mortgage rates ranged from 6.23% to 6.53%, with the 30-year fixed-rate mortgage setting at 6.49% as of early July. The rise in mortgage rates, influenced by the ongoing conflict in Iran and broader economic uncertainties, has placed significant stress on potential homebuyers and the overall real estate market.

Despite these challenges, builders in the region reported that they met their sales targets, although profit margins have come under pressure. The homebuilding sector managed to close on 11,386 homes during the quarter, which is a 7.6% decline compared to the same period in the prior year. The total annual closing rate stood at approximately 42,887 units, remaining relatively stable amidst the downward trends in new construction.

Notably, the existing home sales market has shown signs of stability, with a total of 91,864 sales occurring over a 12-month period ending in May. This suggests that while new construction may be declining, the market for pre-existing homes remains buoyed by demand.

Looking forward, job growth remains a critical driver for the housing industry. Recent corporate relocations to the Dallas-Fort Worth area, including significant moves by Samsung and Morgan Stanley, augur well for employment opportunities. As of May, Texas had added approximately 24,700 jobs, indicating potential for further economic expansion in the region.

The inventory of finished and vacant homes also reflects positive trends. By the end of the second quarter, finished vacant housing inventory fell to its lowest level in two years, signaling a brighter outlook for speculative sales. However, a significant number of developed lots remain available, specifically 111,511 lots, which equates to a 33.5-month supply, exceeding the 24-month equilibrium threshold.

As builders adopt a proactive approach to address overstocked homes, they may navigate economic fluctuations better in the coming years. Investments in build-to-rent projects have seen reduced activity, reflecting shifts in market profitability. In sum, while challenges persist in the North Texas housing market, indicators suggest resilience and potential stabilization as various economic dynamics play out in the longer term.

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