Texas Housing Insight · Flat housing starts held Texas’ months of inventory (MOI) below four months. Last year’s stretch of slow and steady inventory growth has stalled amid

TEXAS HOUSING INSIGHTLUIS B. TORRES

RESEARCH ECONOMISTJAMES P. GAINESCHIEF ECONOMIST WESLEY MILLER

RESEARCH ASSOCIATE

PAIGE WOODSONRESEARCH INTERN T E C H N I C A L R E P O R T

2 1 2 0A P R I L 2 0 1 9 D ATA

1

About This Report ................................................................................................................................. 3

April 2019 Summary.............................................................................................................................. 4

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

Residential Construction Coincident Indicator .................................................................................. 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

Real Estate Center Housing Affordability Index .............................................................................. 18

Real Estate Center Major Metros Housing Affordability Index ....................................................... 19

Prices ................................................................................................................................................... 20

United States Existing and New Home Median Sales Price............................................................. 20

Texas Existing and New Home Median Sales Price ......................................................................... 20

2

Major Metros Existing Home Median Sales Price ......................................................................... ..21

Major Metros New Home Median Sales Price ................................................................................ 21

Real Estate Center Repeat Sales Housing Price Index ..................................................................... 22

Texas Home Median Price Per Square Foot .................................................................................... 22

Major Metros Existing Home Median Price Per Square Foot.......................................................... 23

Major Metros New Home Median Price Per Square Foot............................................................... 23

Texas Home Sale Price to List Price ................................................................................................. 24

Major Metros Existing Home Sale Price to List Price ...................................................................... 24

Major Metros New Home Sale Price to List Price ........................................................................... 25

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 monthly 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, and Paige Woodson

Data current as of June 06, 2019

© 2019, Real Estate Center. All rights reserved.

4

Texas housing sales reached record highs as lower mortgage rates and the healthy labor market

spurred demand across the price spectrum. Increased activity is quickly eating away the marginal

inventory expansion that occurred last year. Housing starts continued to fall short, but momentum

is building in the residential supply pipeline as loan values and permit issuance increased. Pricing

pressures picked up but held well below peak growth levels. Waning affordability and the shortage

of homes priced below $300,000 remained the biggest challenges facing the housing market. Texas’

robust economy and population growth, however, support a favorable outlook.

Supply*

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

activity, inched downward as construction values trended downward. The Residential Construction

Leading Index, however, ticked up for the fourth consecutive month amid falling interest rates and

increases in construction permits. The extended economic expansion in Texas and across the nation

bodes well for the housing market.

First-quarter private bank loan data indicated a rebound in residential construction investment

after a sluggish 2018. Loan values for one-to-four-unit properties jumped 4.4 percent quarter over

quarter (QOQ), and multifamily loans increased 1.7 percent after three consecutive quarterly

declines. Single-family construction permits followed loan values upward, rising 9.1 percent year

to date (YTD). Houston and Dallas-Fort Worth (DFW) remained the national leaders, issuing 3,346

and 3,068 monthly permits, respectively. Austin ranked fifth nationally with 1,790 permits, posting

its fifth consecutive monthly increase. In San Antonio, permits stabilized around 705 after

significant first-quarter volatility.

Total Texas housing starts flattened around a four-year trend despite increased population and a

growing economy. Starts in the single-family sector trended upward, particularly with development

in Central Texas. In contrast, single-family private construction values fell across the state. While

luxury-home construction has stalled over the past year, the new-home price distribution does not

explain the persistent decline in construction values. That said, Texas’ single-family construction

value-per-start ratio hovered around its lowest level since the Great Recession.

Flat housing starts held Texas’ months of inventory (MOI) below four months. Last year’s stretch of

slow and steady inventory growth has stalled amid rebounding demand. A total MOI around six

months is considered a balanced housing market. The MOI for homes priced below $300,000

retracted after marginal relief in 2018. The supply of active listings dropped below 2.9 months for

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

5

homes priced less than $200,000 and approached 3.2 months in the $200,000-$300,000 range. A

slowdown in the rate of Multiple Listing Service (MLS) listings hitting the market weighed on

inventories at the lower end of the market.

The MOI reversed downward in all of the major metros. Austin’s MOI dropped to a YTD low below

2.5 months. Fort Worth followed closely behind at 2.6 MOI. Houston and San Antonio posted their

first MOI decline of the year, dropping to 4.0 and 3.6 months, respectively. Dallas was the

exception, where inventories inched above 3.4 months, nearly a month higher than in April 2018.

Demand

Texas surpassed a record-high 30,000 total housing sales in April as lower mortgage rates provided

some relief to waning affordability. Sales increased across the price spectrum, but a third of the

growth occurred in the $200,000-$300,000 price cohort. The luxury market, consisting of homes

priced more than $500,000, accounted for a quarter of the growth with more than 2,800 single-

family units sold.

Housing sales reached record highs and double-digit YTD growth in all of the major metros. The

existing-home market, which accounts for nearly two-thirds of sales activity, generated the positive

momentum. Dallas and Austin led the way with 10.3 and 9.0 percent total sales growth,

respectively. Houston sales jumped 7.1 percent, while Fort Worth and San Antonio posted monthly

growth above 3 percent.

Robust demand pulled Texas’ average days on market (DOM) down to 60 days, but market

movements were mixed across the major metros. The Austin DOM sank below 55 days, while

Dallas’ metric trended up to that level for the first time since 2013. Houston’s DOM dipped below

59 days, and San Antonio hovered around the statewide average. In Fort Worth the DOM

plateaued in December and has since hovered around 43 days.

Continued concerns of global economic growth and trade uncertainty pulled interest rates down

for the sixth consecutive month. The ten-year U.S. Treasury bond yield fell to an annual low of 2.5

percent, while the Federal Home Loan Mortgage Corporation’s 30-year fixed-rate dropped below

4.2 percent. Texans capitalized on lower rates, pushing mortgage applications for home purchases

up 17.8 percent YTD. These data corroborate the uptick in sales activity across the state,

particularly in affordability constrained markets. Refinance mortgage applications, which are more

sensitive to interest rate fluctuations, increased 38.2 percent over the same period.

Prices

The recent spurt of demand pushed prices upward after a relatively calm start to the year. The

Texas median home price increased $2,000 to $238,000, surpassing 4.1 percent YOY growth for the

first time since October. While still increasing, home prices are no longer soaring at double-digit

levels YOY as in 2017. Austin and Dallas maintained the highest median price at $303,800 and

$288,800, respectively, but remained on a flat trajectory. The Houston ($241,250) and Fort Worth

6

($237,100) median maintained steady YOY growth at 2.2 and 3.0 percent, respectively, while San

Antonio ($227,300) posted 4.3 percent YOY growth.

The Texas Repeat Sales Index suggested stronger home price appreciation in Central Texas with

Austin and San Antonio posting 4.6 and 5.2 percent YOY growth, respectively. The Houston and

Fort Worth index increased 2.9 and 3.7 percent, respectively. On the other hand, YOY growth

decelerated to 2.1 percent in Dallas, the lowest level since 2012.

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

0

20

40

60

80

100

120

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

TX Coincident Index US Coincident Index TX Leading Index

0

50

100

150

200

250

300

350

400

1Q0

7

4Q0

7

3Q0

8

2Q0

9

1Q1

0

4Q1

0

3Q1

1

2Q1

2

1Q1

3

4Q1

3

3Q1

4

2Q1

5

1Q1

6

4Q1

6

3Q1

7

2Q1

8

1Q1

9

1-4 Family Loans

Multifamily Loans

Residential Construction Coincident Indicator (Index Jan 2007 = 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

30

40

50

60

70

80

90

100

110

2007 2009 2011 2013 2015 2017 2019

United States Texas

0

20

40

60

80

100

120

140

160

2007 2009 2011 2013 2015 2017 2019

Single-Family Units 2-4 Family Units

5+ Family Units

Single-Family Housing Construction Permits (Index Jan 2007 = 100)

Texas Housing Construction Permits (Index Jan 2007 = 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. Sources: U.S. Census Bureau and Bank of Tokyo-Mitsubishi UFJ

20

40

60

80

100

120

140

2007 2009 2011 2013 2015 2017 2019

Austin-Round Rock

Dallas-Plano-Irving

Fort Worth-Arlington

Houston-The Woodlands-Sugar Land

San Antonio-New Braunfels

30

40

50

60

70

80

90

100

110

2007 2009 2011 2013 2015 2017 2019

United States

Texas

Major Metros Single-Family Housing Construction Permits (Index Jan 2007 = 100)

Total Housing Starts Per Capita

(Index Jan 2007 = 100)

10

Note: Inflation adjusted. Trend-Cycle Component. Source: Dodge 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

Houston-The Woodlands-SugarLand

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+

2.9 3.3

4.4

5.1

9.2

0

1

2

3

4

5

6

7

8

9

10

$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 (April 2019)

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


50

60

70

80

90

100

110

120

2007 2009 2011 2013 2015 2017 2019

United States Texas

50

100

150

200

250

300

350

400

450

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 2007 = 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

55

70

85

100

115

130

145

2007 2009 2011 2013 2015 2017 2019

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 2007 = 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

Austin-Round Rock Dallas-Plano-Irving

Fort Worth-Arlington Houston-The Woodlands-Sugar Land


Major Metros Existing Homes Days on Market (Days)

Major Metros New Homes Days on Market (Days)

17


Note: Seasonally 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

Source: Mortgage Bankers Association

Note: Trend-Cycle Component. The Texas Housing Affordability Index (HAI) reflects the relationship between the current median family income in a locale and the computed amount required to purchase a median priced home. Source: Real Estate Center at Texas A&M University

-80

-60

-40

-20

0

20

40

60

80

100

2011 2013 2015 2017 2019

Refinance Purchase

0

0.5

1

1.5

2

2.5

I III I III I III I III I III I III I III I III I III I III I III I III I III I

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 18 19

United States Texas

Texas Mortgage Applications

(Year-over-Year Percentage Change)

Real Estate Center Housing Affordability Index (Index)

19

Note: Trend-Cycle Component. The Texas Housing Affordability Index (HAI) reflects the relationship between the current median family income in a locale and the computed amount required to purchase a median priced home. Source: Real Estate Center at Texas A&M University

1.2

1.4

1.6

1.8

2

2.2

2.4

2.6

2.8

3

3.2

I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I

2011 2012 2013 2014 2015 2016 2017 18 19

Texas

Austin-Round Rock

Dallas-Plano-Irving




Real Estate Center Major Metros Housing Affordability Index (Index)

20

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 ($)

21



120,000

150,000

180,000

210,000

240,000

270,000

300,000

330,000

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 ($)

22

Note: The Repeat Sales Housing 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

Austin-Round Rock

Dallas-Plano-Irving




65

75

85

95

105

115

125

135

2011 2013 2015 2017 2019

Existing Home Median Price PSF

New Home Median Price PSF

Texas Home Median Price Per Square Foot ($)

Real Estate Center Repeat Sales Housing Price Index (Year-over-Year Percentage Change)

23



60

70

80

90

100

110

120

130

140

150

160

2011 2013 2015 2017 2019

Austin-Round Rock

Dallas-Plano-Irving




75

85

95

105

115

125

135

145

155

2011 2013 2015 2017 2019

Austin-Round Rock Dallas-Plano-IrvingFort Worth-Arlington Houston-The Woodlands-Sugar LandSan Antonio-New Braunfels

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

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

24



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

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




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

Texas Home Sale Price to List Price (Ratio)

25


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 New Home Sale Price to List Price (Ratio)

i

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