The housing market may be softening across the country, but two veteran homebuilders say they are positioned for an eventual rebound after starting a company in the Houston area.
John Tucker and Scott Sparks said StoneManor Homes will build houses for first-time, move-up and luxury buyers. Prices will range from the mid-$300,000s to more than $1 million.
While some prospective buyers are reluctant to commit due to elevated mortgage rates and national builders are struggling with unsold inventories, Tucker, the StoneManor CEO, said he expects the Federal Reserve to keep cutting interest rates. On Wednesday, the central bank cut its benchmark rate by a quarter of a percentage point, to a range of 3.75% to 4%.
As of Thursday, the 30-year, fixed-rate mortgage averaged 6.19%, data from mortgage giant Freddie Mac showed. If mortgage rates fall below 6%, "we could see this market really taking off," he told Homes.com.
Moreover, builders are either selling lots or walking away from deposits, thereby increasing land availability for start-ups, according to Tucker. "When you have a slowdown, it creates quite a bit of opportunity," he said.
Houston was the nation's second-fastest-growing metropolitan area from 2023 to 2024, according to the U.S. Census. It regularly ranks among the best regions for new home starts, and that's likely to remain the case over the long term, according to Itziar Aguirre, senior director of market analytics for Homes.com.
Builders are lowering prices
But the broader housing market carries risk for any builder, particularly a start-up, she said.
Across the country, homebuilders are lowering prices to drum up demand. National builders offer incentives, such as mortgage-rate buy-downs, but smaller builders typically aren't in a financial position to cut as many deals with buyers, analysts say.
"There is also the issue of buyer affordability and construction costs, and in Houston, specifically, high insurance costs," Aguirre said.
StoneManor already controls 189 lots in such Houston-area cities as Iowa Colony, Montgomery and Spring Branch, Texas, and expects to put more than 100 more lots under contract in the next week, Tucker said.
Construction on the company's first homes is expected to begin by year-end.
Tucker said StoneManor's goal is to give buyers more options to personalize the homes than they typically would get from national builders.
StoneManor hopes to expand
“Many of the homes we see on the market today are still reflective of formulaic and unoriginal thinking, focused more on cost engineering than creativity," he said in a statement.
Tucker and Sparks have nearly 60 years of combined experience. Tucker previously served as a longtime executive with regional builder Gehan Homes, now part of DRB Group.
He and Sparks later started another company, Stonefield Houston, in 2022. Stonefield has six more homes to start and 35 more to close before it winds down operations, according to Tucker.
He said an investor group wanted to provide capital for Stonefield, but Tucker and Sparks felt it was better to launch an entirely new company. Tucker said he was pleased with the Stonefield venture.
"I wished the market didn't get a lot softer as quickly as it did, but we learned a lot," he said in an interview.
Joining Tucker and Sparks on the executive team is Jay Douglas, president of land acquisitions, who worked with Tucker and Sparks at Stonefield. StoneManor hopes to expand into Dallas in the next two to three years, Tucker said.
“Our goal is to build where people want to live – whether that’s in well-established communities, resurging neighborhoods, or up-and-coming areas across the city,” said Sparks, who serves as StoneManor president, in the statement.