The Texas housing market experienced significant developments in August. Despite ongoing challenges such as high-interest rates, the state's residential real estate industry showed resilience. In August, Texas witnessed a noteworthy rebound in home sales, with a 9.5 percent month-over-month increase. However, it's essential to note that this activity remained 8 percent lower than the previous year.
The increase was uniform across all major metros, suggesting stability in the market. New construction sales saw a remarkable 20 percent growth, accounting for 21.7 percent of the market, reflecting the demand for new homes. The average days on the market (DOM) reduced to 55 days, indicating potential market stabilization.
Current Texas Housing Market Trends
This report from the Texas Real Estate Research Center at Texas A&M University delves into key aspects of the Texas housing market, including home sales, construction permits, pricing trends, and the impact of rising mortgage rates.
Housing Supplies in Texas on the Rise
The housing supply in Texas has been increasing since February, with active listings rising by 5.9 percent in August, reaching 90,750 listings. New listings also grew by 5.7 percent to 40,620 units. Despite these increases, the months of inventory (MOI) only experienced a marginal drop to 3.2 months, which suggests that there is still demand in the market.
High Mortgage Rates Impact Loan Applications
The rise in mortgage rates due to interest rate hikes has impacted the real estate market. The 30-year fixed-rate mortgage reached 7.1 percent, leading to a decrease in mortgage applications by over 20 percent in the past eight months. Elevated mortgage rates are increasing the cost of homeownership, affecting potential buyers.
Momentum for Housing Inventories
Texas saw a 5.3 percent increase in single-family construction permits in August, signaling potential growth in housing inventories. Dallas and Houston led with a significant number of permits, while Austin rebounded after a construction slowdown in the previous year. Construction starts also grew, with Dallas and Houston leading the way, contributing significantly to the state's construction activity values.
Price Gains Pause for the First Time This Year
After consistent price gains in 2023, Texas' median home price experienced a slight dip of 0.3 percent in August. However, the overall housing market remains stable, with minimal changes in the Big Four metros. Dallas and Houston have shown strength in their median prices, increasing year-to-date, while Austin and San Antonio lag behind.
Overall, the Texas housing market displayed resilience in August despite challenges, with a rebound in home sales and construction permits. However, the impact of rising mortgage rates and variations in price trends among major metros indicate a dynamic real estate landscape. The market appears to be stabilizing, with potential for increased housing inventories in the near future. Stay tuned for more insights and predictions on the Texas housing market.
Texas Housing Market Predictions 2023 – 2024
As of September 30, 2023, Zillow's data provides valuable insights into the current state of the Texas housing market. The average home value in Texas stands at $300,090, reflecting a slight decrease of 1.8% over the past year. Additionally, homes are going pending in approximately 22 days, emphasizing the brisk pace of the market. Zillow's predictions for Texas MSAs (Metropolitan Statistical Areas) offer a glimpse into regions where home prices are expected to grow the most by 2024.
Current Market Trends
The Texas housing market is characterized by an average home value of $300,090. While there has been a minor decline of 1.8% over the past year, it's important to note that this can be indicative of a balanced and healthy market. This slight dip may present opportunities for buyers and investors to enter the market at a relatively favorable time. Additionally, homes in Texas are in high demand, with a median time to pending sales of around 22 days. This indicates a competitive landscape where properties are selling quickly, underscoring the market's vitality.
Housing Market Predictions for Texas MSAs
Zillow's predictions extend beyond the current market conditions and delve into forecasts for various Texas Metropolitan Statistical Areas (MSAs). Here are some of the Texas MSAs where Zillow anticipates significant home price growth by the end of 2024:
- McAllen, TX: Zillow predicts a substantial growth in home prices in McAllen, with an expected increase of 4.2% by September 30, 2024. This suggests a strong real estate market in the region.
- Jacksonville, TX: Home prices in Jacksonville are also forecasted to rise, with a predicted growth of 4.2% by the end of 2024. This indicates a positive outlook for the local real estate market.
- Stephenville, TX: Zillow predicts a 4.1% increase in home prices in Stephenville, further emphasizing the overall growth in the Texas housing market.
- Corsicana, TX: Corsicana is expected to experience a significant price growth of 3.6% by September 30, 2024, providing opportunities for homeowners and investors.
- Mineral Wells, TX: Despite a small dip in 2023, Mineral Wells is predicted to witness a 3.3% increase in home prices, demonstrating resilience in the market.
- Hereford, TX: The Hereford region is also anticipated to experience an increase in home prices, with a predicted growth of 2.9% by the end of 2024. This indicates a favorable market for homeowners and potential investors in Hereford, Texas.
- Wichita Falls, TX: Zillow's prediction for Wichita Falls includes a 2.7% expected growth in home prices by the end of 2024, signifying opportunities in the local real estate market.
- Waco, TX: While Waco had a slight dip in 2023, Zillow forecasts a turnaround with a 2.5% increase in home prices by September 30, 2024. This suggests a rebound in the Waco real estate market.
- Mount Pleasant, TX: With a predicted 2.5% increase in home prices, Mount Pleasant offers potential growth for homeowners and investors. This forecast indicates a steady and promising market in this region.
- Palestine, TX: Zillow forecasts a robust growth in home prices in Palestine, with an expected increase of 3.2% by September 30, 2024. This prediction suggests a positive outlook for the real estate market in Palestine, Texas.
These predictions underline the diversity of the Texas real estate market, where different regions exhibit varying growth trends. While the overall Texas housing market may have experienced some fluctuations, these predictions highlight several MSAs that are expected to see positive price growth in the coming years. Homebuyers and investors should consider these forecasts when exploring opportunities in Texas real estate.
It's important to keep in mind that real estate markets can be influenced by numerous factors, and predictions are based on historical data and trends. Local market conditions may vary, so consulting with real estate experts and conducting thorough research is advisable for those considering real estate transactions.
Texas Employment Situation
Home sales are typically intimately related to the health of an economy and increase and decrease in tandem with economic activity. As economies decline, the money supply becomes more constrained. As it gets more difficult to obtain money, fewer house buyers enter the market. With fewer buyers accessible due to stricter credit criteria, inventories of houses rise or take longer to sell. Price decreases when there is more product supply and less demand for it.
As recession fears persist, inflationary pressures and uncertainty show that the outlook for the Texas economy in 2023 is mixed. The Texas economy is experiencing mixed fortunes, with the inflation rate decreasing but still high at 6.5%, a drop in home sales, and slow job growth, though the unemployment rate is down to 3.9%.
The goods-producing sector created 8,300 jobs, led by mining, logging, and construction, which accounted for 2,800 new employees, and manufacturing, which added 5,500 workers to the payroll. Private employees' average nominal earnings increased to $30.53, but inflation continued to offset the nominal wage increases, resulting in a decrease in real wages. Inflation reduction measures are expected to ease in 2023, but recession fears continue to be a concern. Despite stubborn inflation growth and overall economic uncertainty, the Texas economy has remained robust.
Energy Sector
The energy sector is one of the main drivers of the Texas economy, and it has experienced significant volatility over the past few years. The price of crude oil has been volatile, which has had a significant impact on the energy sector's overall health. While the price of crude oil has decreased in recent months, it remains higher than it was in 2021, which has helped to stabilize the industry. Additionally, Texas is the leading producer of natural gas in the country, and the price of natural gas has also been volatile in recent months. However, the price has decreased since its peak in August, which has helped to mitigate some of the negative effects on the industry.
Housing Market
The housing market in Texas has been relatively stable over the past few years, but there have been some recent signs of weakness. Total home sales volume has decreased significantly, which is likely due to rising interest rates and overall economic uncertainty. While the housing market in Texas remains relatively strong compared to other states, it is worth monitoring for signs of further weakness.
Employment
Texas has been one of the fastest-growing states in terms of job growth over the past few years, and this trend has continued in recent months. However, there are signs that job growth may be slowing, which could be a cause for concern. Additionally, while the unemployment rate has decreased, the number of Texans filing initial unemployment claims has increased significantly, which could be a sign of weakness in the labor market.
Overall Economic Outlook
The overall economic outlook for Texas remains positive, but some potential headwinds could cause problems. Inflation continues to be a concern, and while it is expected to moderate in 2023, it could still cause problems for consumers and businesses alike. Additionally, the potential for a recession is a concern, as there are signs that the economy may be slowing.
Conclusion
In conclusion, the Texas economy is currently facing some challenges, but it remains relatively strong compared to other states. The energy sector continues to be a major driver of growth, but it is subject to volatility. The housing market is showing signs of weakness, but it remains relatively stable. Employment growth has been strong, but there are signs that it may be slowing. Overall, the economic outlook for Texas remains positive, but some potential headwinds could cause problems in the future.
Top 10 Places to Buy a House in Texas
According to Niche.com, these are the top 10 areas to buy a home based on home valuations, property taxes, homeownership rates, housing prices, and real estate trends. The ranking is based on statistics from the United States Census Bureau, the FBI, and other sources. Cottonwood Creek South is the best place in Texas to buy a house.
- Cottonwood Creek South, a neighborhood in Richardson, TX
- Arapaho, a neighborhood in Richardson, TX
- Lakeside City, TX
- Fulshear, a town in Fort Bend County, TX
- Canyon Creek South, a neighborhood in Richardson, TX
- Heights Park, a neighborhood in Richardson, TX
- Shady Hollow, a suburb of Austin, TX
- Red Lick, Bowie County, TX
- Woodway, a suburb of Waco, TX
- Timberbrook, a neighborhood in Plano, TX
Top 10 Texas Cities Having Highest Real Estate Appreciation Rates Since 2000
According to Neighborhoodscout.com, these are the top ten cities in Texas that have had the highest real estate appreciation since the year 2000.
- Westworth Village
- Gustine
- Balmorhea
- Garden City
- Mico
- Runge
- Granger
- Encinal
- Falls City
- Wingate
Sources:
- https://www.zillow.com/tx/home-values/
- https://www.redfin.com/state/Texas/housing-market
- https://www.recenter.tamu.edu/articles/technical-report/Texas-Housing-Insight
- https://www.neighborhoodscout.com/tx/real-estate
- https://www.niche.com/places-to-live/search/best-places-to-buy-a-house/s/texas/
- https://www.fhfa.gov/DataTools/Tools/Pages/Four-Quarter-Heat-Map.aspx
- https://www.fhfa.gov/AboutUs/reportsplans/Pages/Fannie-Mae-Freddie-Mac-Reports.aspx
- https://www.recenter.tamu.edu/articles/technical-report/outlook-for-the-texas-economy
