Texas Housing Insight · is considered a balanced housing market. The MOI for homes priced less...

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 0J A N U A R Y 2 0 2 0 D ATA

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

Summary ............................................................................................................................................... 4

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

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

Net Residential Loans ....................................................................................................................... 7

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

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

Major Metros Single-Family Housing Construction Permits ............................................................ 9

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

Total New Private Single-Family Construction Value ..................................................................... 10

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

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

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

Texas Existing and New Home Months of Inventory...................................................................... 12

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

Major Metros New Home Months of Inventory ............................................................................ 13

Demand ............................................................................................................................................... 14

Total Housing Sales ......................................................................................................................... 14

Texas Total Housing Sales by Price Cohort ..................................................................................... 14

Major Metros Total Housing Sales.................................................................................................. 15

Texas Homes Days on Market ........................................................................................................ 15

Major Metros Existing Homes Days on Market .............................................................................. 16

Major Metros New Homes Days on Market ................................................................................... 16

Texas Home Days on Market by Price Cohort ................................................................................ 17

30-Year Mortgage Rate and 10-Year Treasury Yield ...................................................................... 17

Texas Mortgage Applications ......................................................................................................... 18

Prices ................................................................................................................................................... 19

United States Existing and New Home Median Sales Price ............................................................ 19

Texas Existing and New Home Median Sales Price ........................................................................ 19

Major Metros Existing Home Median Sales Price .......................................................................... 20

Major Metros New Home Median Sales Price ............................................................................... 20

2

Texas Home Median Price Per Square Foot ................................................................................... 21

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

Major Metros New Home Median Price Per Square Foot .............................................................. 22

Texas Home Sales Price to List Price ............................................................................................... 22

Major Metros Existing Home Sale Price to List Price...................................................................... 23

Major Metros New Home Sale Price to List Price........................................................................... 23

Repeat Sales Home Price Index ...................................................................................................... 24

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 6, 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 January 2020.

Texas housing sales stabilized in January after reaching a record high the previous month. Steady

employment growth and falling mortgage interest rates continued to support housing demand, as

exemplified by increased mortgage applications and a downtick in the average days on market.

Inventories were constrained, especially for homes priced less than $300,000, but renewed permit

issuance indicates positive construction activity in 2020. Although home-price appreciation has

moderated over the past few years, tight supply levels put additional affordability pressure on top

of lackluster average wage growth. Due to the coronavirus outbreak, there may be disruptions to

building material supply chains and the visiting and showing of homes for sale, threatening the

Texas housing market. These effects will probably be reflected in the second quarter of the year.

Supply*

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

activity, balanced after trending upward for four straight months as construction employment

growth slowed. The Residential Construction Leading Index dipped slightly as housing starts

decreased but hovered around the post-crisis high, suggesting solid levels of construction in the

coming months.

Fourth quarter private bank loan data corroborated stable construction activity at the end of the

year, increasing 0.8 percent quarter over quarter (QOQ). Multifamily investment climbed

throughout 2019, rising 2.1 percent to $8.6 billion during 4Q2019. The one-to-four unit sector,

however, stalled through the second half of the year after reaching a cycle-high in 2Q2019 of $7.7

billion.

Single-family construction permits started the year strong, increasing 3.2 percent to a post-

recessionary high after a sluggish end to 2019. Texas led the nation with 11,100 nonseasonally

adjusted permits, accounting for more than 17 percent of the U.S. total but ranking eighth in per

capita issuance. At the metropolitan level, Houston topped the list with 3,565 permits, followed by

DFW with 3,370. Austin permits increased to 1,472 while maintaining the highest per capita rate in

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

5

the Texas Urban Triangle. In San Antonio, monthly permits surged to 846. Texas’ multifamily sector

increased issuance in January but failed to recover to levels reached in 3Q2019 after falling at year

end.

Decreased permitting activity in the last months of 2019 weighed on total Texas housing starts in

January, falling 7.3 percent amid a drawback in the single-family sector. The trend, however,

remained on a strong upward trajectory. Meanwhile, single-family private construction values

dropped 11.1 percent to their lowest level since June 2019 after adjusting for inflation,

corroborating loan value data. After reaching an all-time high in October, San Antonio construction

values trended downward, comprising half of the monthly decrease. The metric declined for the

second straight month in Austin and DFW. Houston values, however, reached an annual high after

improving 3.3 percent.

Strong sales activity chipped away at the state’s supply of active listings. Texas’ months of

inventory (MOI) fell for the third consecutive month to 3.4 months. A total MOI around six months

is considered a balanced housing market. The MOI for homes priced less than $300,000 fell to 2.7

months, while inventory for luxury homes (those priced more than $500,000) remained elevated at

eight 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 was even more constrained than the statewide average. Austin’s

MOI fell to an all-time low of two months, while the Dallas and Fort Worth MOIs ticked down to 2.9

and 2.4 months, respectively. San Antonio’s metric registered less than 3.4 months as inventory for

homes priced less than $300,000 dropped to levels unseen in more than a year after gradual

improvement during 4Q2019. Houston was the exception as the metro’s supply of active listings

continued to rise despite strong sales activity, boosting inventory to 3.9 months.

Demand

Total housing sales during January flattened just below record levels reached at year end.

Nonseasonally adjusted sales for home priced at the lower end of the market (less than $200,000),

however, were well below the series’ January historical average. Sales volumes within the price

range fell year over year (YOY) despite lower interest rates and solid demand fundamentals amid

inventory constraints at the lower end of the market. Homes priced less than $200,000 constituted

36 percent of total monthly sales versus 72 percent in 2011.

Sales activity in the major metros cooled after accelerating during the fourth quarter. Houston sales

corrected downward 2.2 percent from an all-time high in December, while Dallas monthly sales

stabilized at a record 6,000 after increasing 11.3 percent at year end. In Austin, sales for homes

priced $200,000-$400,000 stalled as inventory tightened after strong activity in 2019, pulling

overall sales down 1.3 percent in the MSA. San Antonio extended a steady upward trend, although

Fort Worth sales volumes flattened at their annual average.

6

Texas’ average days on market (DOM) stabilized at 59 days, indicating healthy demand. San

Antonio and Houston’s DOMs hovered around the statewide level at 59 and 58 days, respectively.

In Austin, the metric averaged 51 days, shedding ten days from its year-ago level. The DOMs in

Dallas and Fort Worth trended upward for most of 2019 after low levels between 2015-17 but

showed signs of stabilizing at 55 and 44 days, respectively.

After speculations of a U.S.-China trade truce supported modest increases in interest rates during

4Q2019, U.S.-Iranian military strikes and initial news of the coronavirus outbreak pulled rates down

in January. Current economic fundamentals at the state and national level, however, remain

healthy. The ten-year U.S. Treasury bond yield fell below 1.8 percent, while the Federal Home

Loan Mortgage Corporation’s 30-year fixed-rate decreased to 3.6 percent. After declining the

previous month, mortgage applications for home purchases increased 9.1 percent. Refinance

activity stumbled on the month, but the overall trend remained positive considering refinance

mortgage applications nearly tripled during 2019.

Prices

The Texas median home price flattened to $247,200, although YOY growth hovered around 5.6

percent for the second straight month amid strong sales and inventory contractions. The

nationwide existing-home median price increased 6.8 percent YOY to $283,200 compared with

Texas’ existing-home price of $239,800. The gap between the U.S. and Texas new-home median

price ($352,600 and $293,000, respectively) widened to $59,000 in January after averaging $30,000

in 2019.

Movements in the median home price varied on the metropolitan level. Houston and Austin each

shed $1,900 off their median home price, pulling the metric down to $247,800 and $320,400,

respectively, while the median price in San Antonio steadied at $236,200. North Texas, however,

registered $5,800 and $9,000 increases in Dallas ($302,800) and Fort Worth ($254,200),

respectively. The rise in the former may be explained by the recent surge in sales whereas the

latter’s price hike is likely an upward correction after falling $7,600 over the previous two months.

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 3.6 percent. Strong demand and dwindling supply pushed

Austin’s index up 5.9 percent YOY. Home prices in Houston and Fort Worth increased at a pace of

2.7 and 3.6 percent, respectively. Meanwhile, the Dallas and San Antonio indexes rose just 2.4

percent YOY each. Except for in Austin, home price growth in the major metros has stabilized at

more moderate levels than during 2014-17. Persistent wage improvement that outpaces home

price appreciation, however, is necessary to maintain overall housing affordability, which remains a

challenge to the Texas home market.

7

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

Note: Trend-Cycle Component. Source: Federal Deposit Insurance Corporation

40

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

0

50

100

150

200

250

300

350

400

2007 2009 2011 2013 2015 2017 2019

1-4 Family Loans

Multifamily Loans

Texas Residential Construction Index (Index Jan 2000 = 100)

Net Residential Loans (Index 1Q07 = 100)

8

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

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

20

40

60

80

100

120

140

160

180

200

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

United States

Texas

0

25

50

75

100

125

150

175

200

225

250

275

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Single-Family Units 2-4 Family Units

5+ Family Units

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

Texas Housing Construction Permits (Index Jan 2000 = 100)

9

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

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

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

20

40

60

80

100

120

140

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

United States

Texas

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

Total Housing Starts Per Capita

(Index Jan 2000 = 100)

10

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

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

75

100

125

150

175

200

225

250

275

300

325

2011 2013 2015 2017 2019

Texas

Austin-Round Rock

Dallas-Fort Worth-Arlington



3

4

5

6

7

8

9

10

2007 2009 2011 2013 2015 2017 2019

United States Texas

Total Months of Inventory (Months)

Total New Private Single-Family Construction Value

(Index Jan 2011 = 100)

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

11

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

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

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+

3.0 2.9

3.8

4.4

8.0

0

1

2

3

4

5

6

7

8

9

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

Texas Months of Inventory by Price Cohort (Months)

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

12

Texas Existing and New Home Months of Inventory (Months)


Major Metros Existing Home Months of Inventory (Months)


3

4

5

6

7

8

9

2011 2013 2015 2017 2019

Existing Months of Inventory

New Months of Inventory

1

2

3

4

5

6

7

8

9

2011 2013 2015 2017 2019

Austin-Round Rock

Dallas-Plano-Irving




13


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)

14

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

United States Texas

50

100

150

200

250

300

350

400

450

500

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

15


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)

16



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)

17


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)

18

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)

19

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 ($)

20



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 ($)

21



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 ($)

22



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 ($)

23



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)

24

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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