texas housing insight · houston’s inventory fell below 3.7 months as the metro’s supply of...

TEXAS HOUSING INSIGHTLUIS B. TORRESRESEARCH ECONOMIST

JAMES P. GAINESCHIEF ECONOMIST

WESLEY MILLERRESEARCH ASSOCIATE

PAIGE SILVARESEARCH ASSOCIATE

GRIFFIN CARTERRESEARCH INTERN

T E C H N I C A L R E P O R T

2 1 2 0F E B R U A R Y 2 0 2 0 D ATA

About this Report .................................................................................................................................. 3

February 2020 Summary ....................................................................................................................... 4

Supply .................................................................................................................................................... 7

Texas Residential Construction Index ............................................................................................... 7

Single-Family Housing Construction Permits .................................................................................... 7

Texas Housing Construction Permits ................................................................................................ 8

Major Metros Single-Family Housing Construction Permits ............................................................ 8

Total Housing Starts Per Capita ........................................................................................................ 9

Total New Private Single-Family Construction Value ....................................................................... 9

Total Months of Inventory .............................................................................................................. 10

Texas Months of Inventory by Price Cohort ................................................................................... 10

Texas Current Months of Inventory by Price Cohort ...................................................................... 11

Texas Existing and New Home Months of Inventory...................................................................... 11

Major Metros Existing Home Months of Inventory ....................................................................... 12

Major Metros New Home Months of Inventory ............................................................................ 12

Demand ............................................................................................................................................... 13

Total Housing Sales ......................................................................................................................... 13

Texas Total Housing Sales by Price Cohort ..................................................................................... 13

Major Metros Total Housing Sales.................................................................................................. 14

Texas Homes Days on Market ........................................................................................................ 14

Major Metros Existing Homes Days on Market .............................................................................. 15

Major Metros New Homes Days on Market ................................................................................... 15

Texas Home Days on Market by Price Cohort ................................................................................ 16

30-Year Mortgage Rate and 10-Year Treasury Yield ...................................................................... 16

Texas Mortgage Applications ......................................................................................................... 17

Prices ................................................................................................................................................... 18

United States Existing and New Home Median Sales Price ............................................................ 18

Texas Existing and New Home Median Sales Price ........................................................................ 18

Major Metros Existing Home Median Sales Price .......................................................................... 19

Major Metros New Home Median Sales Price ............................................................................... 19

Texas Home Median Price Per Square Foot ................................................................................... 20

2

Major Metros Existing Home Median Price Per Square Foot ......................................................... 20

Major Metros New Home Median Price Per Square Foot .............................................................. 21

Texas Home Sales Price to List Price ............................................................................................... 21

Major Metros Existing Home Sale Price to List Price...................................................................... 22

Major Metros New Home Sale Price to List Price........................................................................... 22

Repeat Sales Home Price Index ...................................................................................................... 23

3

Real Estate Center economists continuously monitor many facets of the global, national, and Texas

economies. Texas Housing Insight is a summary of important economic indicators that help discern

trends in the Texas housing markets. All measurements are calculated using seasonally adjusted

data, and percentage changes are calculated month-over-month, unless stated otherwise.

This monthly publication provides data and insights on the Texas housing markets. We hope you

find them useful. Your feedback is always appreciated. Send comments and suggestions to

[email protected].

Dr. James Gaines, Dr. Luis Torres, Wesley Miller, Paige Silva, and Griffin Carter

Data current as of March 24, 2020

© 2020, Real Estate Center. All rights reserved.

mailto:[email protected]

4

Please note this review does not account for the impacts of the COVID-19 outbreak but reflects the

market through February 2020.

Prior to the domestic coronavirus outbreak, Texas housing sales increased 2.3 percent in February

during healthy economic conditions and low interest rates. Housing demand was robust, although

inventories were constrained, especially for homes priced less than $300,000. Strong supply-side

activity, however, was poised to alleviate some shortages. Home-price appreciation accelerated,

but the Repeat Sales Index suggested more moderate price growth. The coronavirus outbreak is

the greatest threat to the Texas housing market via disruptions to building material supply-chains,

the negative income shock, and wariness of visiting and showing homes for sale. These effects may

show up in the March data but will likely have a significant impact during the second quarter of the

year.

Supply*

Contemporaneous and anticipated construction levels reached post-recessionary highs in February.

The Texas Residential Construction Cycle (Coincident) Index, which measures current construction

levels, ticked up amid industry wage and employment improvements. Falling interest rates and

increased building permits and housing starts supported growth in the Residential Construction

Leading Index.

Single-family construction permits extended a yearlong upward trend, rising 1 percent. Texas led

the nation with 11,211 nonseasonally adjusted permits, accounting for more than 17 percent of the

U.S. total, but ranked sixth in per capita issuance. At the metropolitan level, Houston topped the

list with 3,515 permits but actually declined 1.8 percent after adjusting for seasonality. Austin and

Dallas comprised most of the state’s increase, issuing 1,631 and 2,486 nonseasonally adjusted

permits, respectively. San Antonio permits fell to 773, but the metric remained elevated in Fort

Worth at 954. In the multifamily sector, permits decreased 5.6 percent after a modest start to the

year.

Texas housing starts surged 21.5 percent to its greatest post-crisis level with improvements in both

the single-family and multifamily sectors. On the other hand, single-family private construction

* All measurements are calculated using seasonally adjusted data, and percentage changes are calculated month over month, unless stated otherwise.

5

values dropped 4.7 percent after adjusting for inflation. As with permits, Houston was responsible

for most of the contraction. Austin and DFW values flattened, while San Antonio only partially

recovered from a 13 percent plunge in January.

Record sales and a dwindling supply of active listings pulled Texas’ months of inventory (MOI)

down to an all-time low of 3.2 months. A total MOI around six months is considered a balanced

housing market. The MOI for homes priced less than $300,000 fell to 2.5 months, while inventory

for luxury homes (those priced more than $500,000) also declined but remained elevated at 7.5

months. This disparity exemplifies the shortage of affordable housing, although efforts have been

made to more closely match demand and supply.

Inventory in the major metros decreased across the board. Austin maintained the most constrained

inventory with an MOI of 1.7 months, followed by Fort Worth at 2.3 months. The Dallas and San

Antonio metrics slid to 2.7 and 3.0 months, respectively. After a brief expansion to start the year,

Houston’s inventory fell below 3.7 months as the metro’s supply of active listings contracted for

the first time in six months, largely due to reductions in the lower price ranges.

Demand

After stalling the previous month, total housing sales during February rose 2.3 percent in an

environment of low interest rates and solid employment growth. Sales for homes priced more than

$400,000 accounted for much of the gain, whereas activity for homes priced less than $400,000

decelerated.

In nearly all of the major metros, sales for homes in the luxury price bracket were the greatest

contributor to overall closings. Central Texas sales increased 2.2 and 2.1 percent in Austin and San

Antonio, respectively, while Dallas sales rose 3 percent. Although sales for higher-priced homes in

Fort Worth climbed 10.3 percent, total sales flattened as activity in other price ranges took a step

back. Houston was the exception. Homes priced between $200,000-$400,000 comprised two-thirds

of the city’s overall 4.8 percent improvement.

Texas’ average days on market (DOM) ticked down to 58 days, indicating healthy demand. The

metric stabilized at 56 days in Houston and at 53 and 43 days in Dallas and Fort Worth,

respectively. Demand was especially robust in Austin, where the DOM declined to 49 days after

shedding more than a week off its year-ago level. San Antonio’s DOM ticked up slightly to 62 days

but hovered around its seven-year average.

Growing concerns over the coronavirus outbreak and falling oil prices pulled interest rates down in

February. The ten-year U.S. Treasury bond yield decreased to 1.5 percent, while the Federal Home

Loan Mortgage Corporation’s 30-year fixed-rate fell below 3.5 percent. Mortgage applications for

home purchases slowed but maintained 2.7 percent year-to-date (YTD) growth. Refinance activity

remained sluggish from month to month, although the number of applications received was

astronomical relative to the same period last year.

6

Prices

The Texas median home price accelerated 6.3 percent YOY to $249,100 as demand strengthened

and inventory shrank. Austin’s median price reached double-digit YOY growth for the first time

since 2015, skyrocketing nearly 13 percent to $335,600. The metric in San Antonio ($242,000) and

Houston ($252,100) rose 6.8 and 6.4 percent, respectively. On the other hand, home-price

appreciation softened to around 5 percent growth in North Texas, resulting in a median price of

$297,500 in Dallas and $249,100 in Fort Worth.

The Texas Repeat Sales Home Price Index, a better measure of changes in single-family home

values, provides insight into how Texas home prices evolve. The index indicated more moderate

annual home price appreciation of 3.2 percent. Except for in San Antonio, where the metric picked

up its pace to rise 3.4 percent YOY, the metropolitan indices’ growth rates slowed from the month

prior. The Austin index registered just 4.6 percent growth compared with the metro’s much greater

home-price appreciation. Houston’s index increased 2.8 percent, while the Dallas and Fort Worth

indices rose 2.5 and 2.9 percent, respectively. Favorable housing affordability relative to other

parts of the country supported the Lone Star State’s economic growth in the years following the

burst of the housing bubble a decade ago. Texas needs to maintain affordability for the housing

market to remain a stalwart in the impending recession and subsequent recovery.

The data reported here indicate the strength of the Texas housing market prior to the domestic

COVID-19 outbreak and plunge in oil prices. The events of the past month and the economic

expectations for the second half of the year will overshadow recent optimistic conditions. The

government stimulus bill signed late in March allowing forbearances on federally backed mortgage

loans, moratoriums on evictions, and direct financial payments to Americans earning within an

income threshold will aid current homeowners, but it is unlikely to spur additional home sales.

Even though we expect the real estate sector will be less affected than many other industries, the

Center’s 2020 housing projections will in all probability be reached. The total impact of the

impending recession on Texas’ housing market is yet to be seen.

7

Note: Trend-Cycle Component. Sources: Real Estate Center at Texas A&M University and Federal Reserve Bank of Dallas

Note: Trend-Cycle Component. Sources: U.S. Census Bureau and Real Estate Center at Texas A&M University

60

80

100

120

140

160

180

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

TX Coincident Index US Coincident Index TX Leading Index

20

40

60

80

100

120

140

160

180

200

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

United States

Texas

Texas Residential Construction Index (Index Jan 2000 = 100)

Single-Family Housing Construction Permits (Index Jan 2000 = 100)

8

Note: Trend-Cycle Component. Sources: U.S. Census Bureau and Real Estate Center at Texas A&M University

Note: Trend-Cycle Component. Fort Worth is missing data for Somervell County. Sources: U.S. Census Bureau and Real Estate Center at Texas A&M University

0

25

50

75

100

125

150

175

200

225

250

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Single-Family Units 2-4 Family Units

5+ Family Units

20

60

100

140

180

220

260

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Austin-Round Rock

Dallas-Plano-Irving

Fort Worth-Arlington

Houston-The Woodlands-Sugar Land

San Antonio-New Braunfels

Texas Housing Construction Permits (Index Jan 2000 = 100)

Major Metros Single-Family Housing Construction Permits (Index Jan 2000 = 100)

9

Note: Trend-Cycle Component. Source: U.S. Census Bureau and Bank of Tokyo-Mitsubishi UFJ

Note: Inflation adjusted. Trend-Cycle Component. Source: Dodge Data & Analytics

20

40

60

80

100

120

140

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

United States

Texas

75

100

125

150

175

200

225

250

275

300

325

2011 2013 2015 2017 2019

Texas

Austin-Round Rock

Dallas-Fort Worth-Arlington



Total New Private Single-Family Construction Value

(Index Jan 2011 = 100)

Total Housing Starts Per Capita

(Index Jan 2000 = 100)

10

Note: Trend-Cycle Component. Months of inventory for the United States is estimated using weights for all existing homes and new single-family homes; new nonsingle-family homes are not included. Texas includes all existing and new homes. For more information, see Months of Inventory. Sources: U.S. Census Bureau, National Association of Realtors, and Real Estate Center at Texas A&M University

Note: Trend-Cycle Component. Source: Real Estate Center at Texas A&M University

3

4

5

6

7

8

9

10

2007 2009 2011 2013 2015 2017 2019

United States Texas

2

4

6

8

10

12

14

16

2011 2013 2015 2017 2019

$0-$199,999 $200,000-$299,999

$300,000-$399,999 $400,000-$499,999

$500,000+

Total Months of Inventory (Months)

Texas Months of Inventory by Price Cohort (Months)

https://assets.recenter.tamu.edu/Documents/Articles/2046-7.pdf

11

Note: Seasonally adjusted. Source: Real Estate Center at Texas A&M University

Texas Existing and New Home Months of Inventory

(Months)


2.8 2.73.5

4.1

7.5

0

1

2

3

4

5

6

7

8

$0 - $200K $200K - $300K $300K - $400K $400K - $500K $500K+

3

4

5

6

7

8

9

2011 2013 2015 2017 2019

Existing Months of Inventory

New Months of Inventory

Texas Current Months of Inventory by Price Cohort (February 2020)

12

Major Metros Existing Home Months of Inventory (Months)



1

2

3

4

5

6

7

8

9

2011 2013 2015 2017 2019

Austin-Round Rock

Dallas-Plano-Irving




2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

2011 2013 2015 2017 2019

Austin-Round Rock Dallas-Plano-Irving

Fort Worth-Arlington Houston-The Woodlands-Sugar Land


Major Metros New Home Months of Inventory (Months)

13

Note: Trend-Cycle Component. Sales for the United States include all existing homes and new single-family homes sold through an MLS; new non-single-family homes are not included. Texas includes all existing and new homes. For more information see Housing Sales. Sources: U.S. Census Bureau, National Association of Realtors, and Real Estate Center at Texas A&M University


60

80

100

120

140

160

180

200

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

United States Texas

50

100

150

200

250

300

350

400

450

500

550

2011 2013 2015 2017 2019

$0-$199,999 $200,000-$299,999

$300,000-$399,999 $400,000-$499,999

$500,000+

Total Housing Sales (Index Jan 2000 = 100)

Texas Total Housing Sales by Price Cohort (Index Jan 2011 = 100)

https://assets.recenter.tamu.edu/Documents/Articles/2046-5.pdf

14


Note: Trend-Cycle Component. For single-family homes. Source: Real Estate Center at Texas A&M University

75

100

125

150

175

200

225

250

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Austin-Round Rock

Dallas-Plano-Irving




45

55

65

75

85

95

105

115

2011 2013 2015 2017 2019

Existing Home Days on Market New Home Days on Market

Texas Homes Days on Market (Days)

Major Metros Total Housing Sales (Index Jan 2000 = 100)

15



25

35

45

55

65

75

85

95

105

2011 2013 2015 2017 2019

Austin-Round Rock

Dallas-Plano-Irving




60

70

80

90

100

110

120

2011 2013 2015 2017 2019




Major Metros Existing Homes Days on Market (Days)

Major Metros New Homes Days on Market (Days)

16


Note: Nonseasonally adjusted. Sources: Federal Home Loan Mortgage Corporation and Federal Reserve Board

40

50

60

70

80

90

100

110

120

130

2011 2013 2015 2017 2019

$0-$199,999 $200,000-$299,999

$300,000-$399,999 $400,000-$499,999

$500,000+

1.00

2.00

3.00

4.00

5.00

6.00

7.00

2007 2009 2011 2013 2015 2017 2019

Mortgage Bond

30-Year Mortgage Rate and 10-Year Treasury Yield

(Percent)

Texas Home Days on Market by Price Cohort (Days)

17

Note: Seasonally adjusted. Source: Mortgage Bankers Association

-100

-50

0

50

100

150

200

2011 2013 2015 2017 2019

Refinance Purchase

Texas Mortgage Applications

(Year-over-Year Percentage Change)

18

Note: Trend-Cycle Component. For single-family homes. Source: Federal Reserve Bank of St. Louis


160,000

180,000

200,000

220,000

240,000

260,000

280,000

300,000

320,000

340,000

2011 2013 2015 2017 2019

Existing Home Median Sales Price

New Home Median Sales Price

130,000

150,000

170,000

190,000

210,000

230,000

250,000

270,000

290,000

310,000

2011 2013 2015 2017 2019

Existing Home Median Sale Price

New Home Median Sale Price

Texas Existing and New Home Median Sales Price ($)

United States Existing and New Home Median Sales Price ($)

19



120,000

150,000

180,000

210,000

240,000

270,000

300,000

330,000

360,000

2011 2013 2015 2017 2019

Austin-Round Rock

Dallas-Plano-Irving




170,000

200,000

230,000

260,000

290,000

320,000

350,000

380,000

2011 2013 2015 2017 2019

Austin-Round Rock

Dallas-Plano-Irving




Major Metros Existing Home Median Sales Price ($)

Major Metros New Home Median Sales Price ($)

20



65

75

85

95

105

115

125

135

145

2011 2013 2015 2017 2019

Existing Home Median Price PSF

New Home Median Price PSF

60

80

100

120

140

160

180

2011 2013 2015 2017 2019

Austin-Round Rock

Dallas-Plano-Irving




Major Metros Existing Home Median Price Per Square Foot ($)

Texas Home Median Price Per Square Foot ($)

21



75

85

95

105

115

125

135

145

155

165

2011 2013 2015 2017 2019




0.90

0.91

0.92

0.93

0.94

0.95

0.96

0.97

0.98

2011 2013 2015 2017 2019

Existing Home Sale-to-List Price Ratio

New Home Sale-to-List Price Ratio

Texas Home Sale Price to List Price (Ratio)

Major Metros New Home Median Price Per Square Foot ($)

22



0.90

0.91

0.92

0.93

0.94

0.95

0.96

0.97

0.98

0.99

2011 2013 2015 2017 2019

Austin-Round Rock

Dallas-Plano-Irving




0.91

0.92

0.93

0.94

0.95

0.96

0.97

0.98

0.99

2011 2013 2015 2017 2019

Austin-Round Rock

Dallas-Plano-Irving




Major Metros Existing Home Sale Price to List Price (Ratio)

Major Metros New Home Sale Price to List Price (Ratio)

23

Note: Seasonally adjusted. The Repeat Sales Home Price Index tracks real home price appreciation for residential single-family homes.

Source: Real Estate Center at Texas A&M University

0

1

2

3

4

5

6

7

8

9

10

2014 2015 2016 2017 2018 2019 2020Texas Austin-Round RockDallas-Plano-Irving Fort Worth-ArlingtonHouston-The Woodlands-Sugar Land San Antonio-New Braunfels

Repeat Sales Home Price Index (Year-over-Year Percentage Change)

i

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