From the Texas A&M University Real Estate Research Center
Housing market indicators are signaling the Texas housing frenzy is over, says a research economist for the Texas Real Estate Research Center at Texas A&M University.
“Both housing sales growth and housing price growth have peaked and are slowing,” said Dr. Luis Torres. “In addition, months of inventory, listings, and days on market have reached a trough and are beginning to rise.”
Torres added, “Texas housing sales accelerated after the pandemic shut down the economy in March and April of 2020. This caused the already depleted inventory of homes for sale to reach historic low levels and led to exuberant home price growth.”
Torres attributes the surprisingly strong housing market performance to depressed mortgage rates, an increase in home-purchasing preferences, homebuyers not being affected by the pandemic, and by the federal governments transfer payments and suspension of student loan payments.
“Texas’ single-family sales peaked at the start of 2021,” he said. “That’s when San Antonio home sales were highest. Austin, Dallas-Fort Worth, and Houston recorded their highest number of housing sales in the last quarter of 2020.”
Torres noted housing sales numbers were hindered by the lack of homes available for sale; therefore, sales are possibly not the best sole indicator of when the housing market started to slow.
“Housing prices are determined by the demand and supply of homes,” he said. “Year-over-year price growth peaked in August in Texas, Dallas, and Houston. Fort Worth and San Antonio posted highs in July; Austin’s came in June.”
“Some of the price pressures caused by strong demand and weak supply in the housing market have subsided,” said Torres.
Months of inventory for the state and its major Metropolitan Statistical Areas (MSAs) hit bottom in May. The same is true for active listings, with the exception of San Antonio, which recorded its low in April.
“New and pending listings reached a trough in February thanks to Winter Storm Uri shutting down the Texas economy,” said Torres. “The overall trend for both new and pending listings signals the supply of homes for sale continues to grow.”
Days on market, a demand indicator, is another variable that reached a trough statewide and in the four major MSAs in August. Other indicators, such as mortgage home-purchase applications, are slowing statewide.
Torres isn’t surprised that the pandemic frenzy is being replaced by more long-run, sustainable rates of growth. Texas Real Estate Research Center forecasts for 2021 and 2022 included expectations for strong demand, improving inventories, moderate price growth, and slowly rising mortgage rates.
Read the forecasts at https://www.recenter.tamu.edu/articles/research-article/2021-Mid-Year-Outlook-2312.