The Statesman reports from Texas. "Builders started construction on a record number of homes in Central Texas in 2006 but slowed the pace as the year drew to a close as inventories rose slightly, new figures show. Builders started 16,743 homes last year, a 10 percent increase from 2005, according to Residential Strategies."

"But the supply of new, unsold homes also climbed to a record level, prompting builders to start 10 percent fewer homes in the last three months of 2006 than the year-earlier period. 'While the Austin housing market remains robust, it has not been immune to some of the negative forces that have shaped the national housing picture,' RS partner Mark Sprague said."

"Ted Wilson, a partner in the Dallas office, said builders ended up with more unsold homes as the cancellation rate on pending contracts edged up in 2006. Nationally, the cancellation rate climbed from 25 percent to 35 percent during the past year, Wilson said, and the Austin area experienced a similar increase."

"Buyers are canceling contracts for various reasons. Weak credit is to blame for some cancellations for entry-level homes, and some contracts for higher-priced homes are being canceled by relocation buyers having difficulty selling their homes in slower markets elsewhere. About 2,900 new homes sat on the market in Central Texas in December."

"The oversupply 'will prompt many of the builders to offer deeper discounts and incentives,' Sprague said."

"Eldon Rude, director of the Austin office of Metrostudy, thinks the large publicly traded builders, which have been looking to other divisions, including Texas, to be more profitable as markets have slowed elsewhere, will build fewer speculative homes in 2007 to bolster profit margins. He also expects the Austin market to attract fewer investor buyers than it did in the past year or two."

"Rude also expects fewer people to move to Austin this year than last. 'This is especially true of the people that were relocating to the Austin area over the last two years or so without jobs, taking advantage of the huge increases in the values of their homes in other states,' Rude said."

"Travis County home foreclosure postings for the first month of 2007 will rise slightly in today's auction, to 300 from 295 in December, according to a report. Compared with 278 postings in January 2006, however, foreclosures will be up 8 percent."

"Many of the upcoming residential foreclosure auctions 'had an upside-down loan-to-value ratio,' said George Roddy, president of the firm that tracks foreclosures. 'Simply put, the homeowner has borrowed more money on the home than it is worth,' he said. 'So, generally, the homeowner cannot sell the property for the amount that he or she owes on it, and the lender has invested or loaned more than the property is worth. This creates a no-win situation.'"

"The highest percentage of upside-down postings in the Austin area for January will be in Bastrop County. 30 percent of the postings filed for January are upside-down. Upside-down postings make up 21 percent of the notices filed in Travis County, 21 percent in Williamson County and 23 percent in Hays County."

"Of the 20 counties tracked in North and Central Texas, Travis ranked sixth in total commercial and residential postings for 2006, with 3,713. Leading the state was Dallas County, with 19,184 postings, followed by Tarrant, 12,763; Bexar, 8,837; Collin, 4,477; and Denton, 4,181. Williamson County, with 2,435 postings, ranked seventh, just behind Travis."

The Express News. "As the housing market cooled in much of the country, investors swarmed into San Antonio in 2006. Some real estate agents said out-of-state investors, mostly from California, Arizona and Florida, accounted for half their clients."

"But that wave of investors meant the rental market for single-family homes also got flooded. The average rent dropped $202 a month since 2005, from $1,301 to $1,099, according to the San Antonio Board of Realtors."

"By the end of October, renters had their pick of more than 2,000 homes. More than 10,650 homes went on the rental market in the first 10 months of the year, 22 percent more homes than last year."

"Since 2001, the number of sales for homes priced above $300,000 has jumped 115 percent, according to data from the Texas A&M Real Estate Center. Meanwhile, homes that cost $100,000 or less became increasingly scarce in San Antonio."

"Ten years ago, more than 66 percent of the existing homes sold were priced under $100,000. By late 2006, that market share had plummeted to 26 percent."

"There were signs by the end of the year that San Antonio's real estate market might be returning to a more normal cycle. As of the last day of November, the number of homes on the market swelled to more than 9,000."

"One side effect of a healthy housing market and easy lending requirements is a lot of foreclosures. The high number of San Antonio foreclosures in 2006 was reminiscent of the late 1980s when oil busted and the city's real estate market crashed."

"But this time around home prices were climbing in neighborhoods across San Antonio. So what happened? Lenders made riskier loans, including many that required no money down, said Jim Gaines, a research economist with Texas A&M University."

"That caused some families to get in over their heads. 'The biggest problem with all of that is if you buy a house with no equity in it, you don't feel like you have a lot to lose,' Gaines said. 'It's easier to walk away from.'"

"In 1996, 3,894 Bexar County homes went into foreclosure. This year, 8,837 homes did."