- The Houston housing market is slowing due to the energy sector's woes.
- New home permits grew across Texas in October.
- Although the sector has largely recovered from the housing bust, permitting activity is still not at all-time highs.
In the most recent report from the Real Estate Center at Texas A&M University, the slowing energy sector’s drag on the Houston housing market remains evident.
And, the report said, homes sales in the state for 2015 remain positive, but the rate of growth has lagged behind the nation as a whole.
While the Lone Star State’s economy continued to grow, the pace has moderated. With a drop in energy prices and the continued strength in the U.S. dollar, those things that boost Texas’ economy are causing it the most pain.
Even though employment gained, it was not as vigorous an uptick as it could have been since oil and gas extraction employment is slumping. Houston is singled out as the epicenter of this effect.
It’s not a one-for-one exchange of employees between sectors: homebuilders still are constrained by a shortage of skilled labor in construction workers of all types. Lots that are appropriate for quick building are also more difficult to come by.
Still the October reading of the Texas Residential Construction Leading Index , which looks prospectively at directional changes in residential construction, showed strength. Building permits and housing starts were healthy across the state, but the report singles out Austin and Houston as two spots where single-family housing construction permits declined. A similar index that measures the current construction activity remained sluggish.
Even though a recovery in housing is clearly underway, no major metro in Texas MSA has reached its prior permitting peak.
The inventory of existing homes for sale in Texas is now 3.5 months, buoyed by small gains that continued in October. That trend should continue as the new houses being permitted now come on line in early 2016.
As with the rest of the county, many key real estate indicators are returning to pre-bust levels.
Statewide, housing sales passed January 2007 levels in August.
In October, statewide housing sales increased by a seasonally adjusted 3.6 percent year-over-year. Houston was the sole exception in this positive statistic: Four out of the five major metros posted home sales increases, while Houston’s sales year-over-year fell by a seasonally adjusted 2.9 percent.
Days on market showed differences within the state as well. Even though days on market is generally low, new homes took longer to sell in Austin and Houston, as compared to Dallas and San Antonio.
On the price side, both average and median sales prices in Texas have risen precipitously since 2011, and continued their upward march in October.
The song remains the same throughout the U.S.– limited supply coupled with improving demand is lifting prices. In Texas, Houston is an appreciation leader, again paired with Austin for that metric. But, the October report makes a point of mentioning that the woes in the energy sector are dampening Houston’s continued price appreciation trend.
The report also makes mention of the fact that new houses cost significantly more than existing ones, with construction costs and land prices playing a major role in the difference.