Starts in 2008 totaled 8,987, or 34 percent lower than the 13,624 housing starts in 2007, the report said. For fourth quarter 2008, starts totaled 1,459 new homes, down 51 percent from the same quarter last year, which saw 2,993 new starts.

“The convergence of bad news regarding the economy shattered consumer confidence during the fourth quarter 2008,” said Mark Sprague, Austin partner for Residential Strategies. “Reports from the builders have been of high cancellations on previous new home orders, and of buyers that are very tentative on purchase decisions until the economic outlook improves.”

But, Sprague emphasized, the fourth quarter is traditionally the slowest period of the year for new home sales, and the area may see an improvement in sales by late January.

Sales of new homes were also down for 2008. Builders closed on 10,933 new homes for the year, down 26 percent from the 14,809 new homes closed in 2007. For the quarter, builders closed on 2,289 new homes, down 30 percent from the same quarter in 2007. Inventory under construction also fell to 2,112 units under construction at year-end 2008 compared with the 3,093 units under construction at the end of the third quarter 2008.

The median new home price for starts rose during the fourth quarter 2008 to $219,680, up from $211,420 in the third quarter 2008 and $207,985 in the fourth quarter 2007.

The lot supply reduction in Central Texas was the first decrease the area has seen in about two years, Sprague said.

“With only 5,300 or so lots truly under development, and very little being added to the pipeline in 2009, the expectation should be that we will work the lot inventory down further in the upcoming quarters” he said. “This is an important step in the recovery process as the slow down in annual starts means that the current lot supply stands at 41 months, well above a 24-month equilibrium.”

Employment numbers also helped mitigate the gloom. According to the Texas Workforce Commission, Austin created 13,000 net new jobs for the 12 months ended November, 2008--that’s much lower than the growth rate the region experienced in recent years but still better than other areas of the country that lost jobs in 2008.

“Despite the national recession, Austin clearly has one of the strongest local economic engines of any place in the United States,” Sprague said. “The strength in job growth means that the housing downturn has been less severe in Austin than in most other parts of the country, and its endurance means that Austin likely will be one of the first housing markets to turn around.”

http://www.bizjournals.com/austin/stories/2008/12/29/daily30.html