Dive Brief:

• Atlanta-based homebuilder Ashton Woods is set to roll out a brand of new-home communities aimed at entry-level buyers, according to Builder. 

• Starlight Homes will be active in Atlanta, central Florida, Austin, TX, and Phoenix by the end of March, with plans to be available in all 12 of the company’s markets by the end of this year.

• The communities will feature homes with monthly payments from the mid-$800s to the low-$1,000s, with six to eight floor-plan options. The company told Builder that it is targeting millennials who are currently renting via email and direct mail.

Dive Insight:

Ashton Woods is joining a host of builders that are looking toward the entry-level market amid forecasts of solid growth in the segment in the coming years. Aside from longtime category leader LGI Homes, builder D.R. Horton has joined the concerted push to serve this segment in the last few years, recently joined by Meritage Homes' LiVE.NOW. brand and Toll Brothers' T|Select line.

D.R. Horton said last month that its entry-level Express Homes, which launched in early 2014, accounted for 20% of its home sales revenue and 28% of its home closings during the first quarter of 2017.

Robust demand in this sector also helped LGI Homes secure monthly record closings in December, with 467 homes closed, while Atlanta-based PulteGroup recently noted that sales to first-time buyers jumped 12% in the fourth quarter, with the potential for more investment in that category ahead.

Despite the optimism surrounding the expected pickup in first-time buyers eyeing entry-level homes, there are lingering concerns that further mortgage rate increases could widen the affordability gap for buyers in this sector. The National Association of Realtors noted that President Donald Trump’s recent reversal of a 25-basis-point cut in Federal Housing Administration mortgage fees could keep as many as 40,000 potential buyers out of the market this year.

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