Housing-Insight-May-2021

Texas Housing Insight – May 2021 Summary

by Real Estate ArticlesResourcesStats

Total Texas housing sales increased 2 percent in May but continued to normalize from elevated levels the last few months of 2020. Single-family housing permits rose for the third consecutive month, although housing starts stumbled as lumber prices skyrocketed. Overall, sales were persistent despite rising costs and limited supply for homes priced less than $300,000, pushing sales activity toward higher-priced homes. Mortgage rates inched down after rising during the first quarter, but double-digit home-price appreciation chipped away at housing affordability. The unprecedented low level of inventory available for sale is the greatest challenge to Texas’ housing market. The state’s diverse and expanding economy, favorable business policies, and steady population growth, however, supported a favorable outlook.   

Supply*

The Residential Construction Cycle (Coincident) Index, which measures current construction levels, elevated nationally and within Texas due to improved industry wages, employment, and construction values during May. The Texas Residential Construction Leading Index, however, decelerated as building permits (weighted by market value) and residential starts decreased, and the ten-year real Treasury bill increased. Still, the overall upward trend indicated stable future activity. Houston and Austin reflected statewide fluctuations in weighted building permits and residential starts. Houston’s leading index declined, while Austin’s metric remained on an upward trajectory. The Dallas-Fort Worth (DFW) and San Antonio indexes also suggested steady construction in the coming months.

Single-family construction permits maintained steady growth of 4.8 percent in May, trending upward for more than a year. Houston topped the national list with 4,909 nonseasonally adjusted permits despite registering a seasonally adjusted decrease. DFW posted double-digit monthly growth to 4,880 permits. Meanwhile, Austin and San Antonio issued 2,283 and 1,383 permits, respectively. Texas’ multifamily sector registered a steep contraction as issuance shifted from five-or-more units to duplexes, triplexes, and four-unit structures. The metric, however, remained up 6.1 percent year to date (YTD) relative to the same period last year.

Despite strengthening economic conditions and ample housing demand, total Texas housing starts decreased 6.1 percent per capita as lumber prices skyrocketed 60 percent on a monthly basis to a record high. Similarly, single-family private construction values declined 8.7 percent in real terms as the metric trended downward in Texas’ major metros. San Antonio registered a steep plummet in values during May but was still the exception as values extended a yearlong upward trajectory due to strong growth at the beginning of the year.

Texas’ months of inventory (MOI) sank below 1.2 months for the first time in series history as sales activity picked up and the number of homes added to the Multiple Listings Service decreased. A total MOI around six months is considered a balanced housing market. Inventory for homes priced less than $300,000 was even more constrained, dropping below 0.9 months. Even the MOI for luxury homes (homes priced more than $500,000), the price range at which inventory was least constrained, slid to two months.

Inventory in the major metros also declined during May. The supply situation in Austin was most critical with the MOI slipping to just 0.4 months. The metric in North Texas decreased to 0.9 and 1.0 months in Fort Worth and Dallas, respectively, while San Antonio inventory matched the statewide average. Houston’s MOI, although slightly greater than the other metros, ticked down to a record-low 1.4 months. The severe lack of inventory is unsustainable and is the main headwind to the health of Texas’ housing market.

Demand

Total housing sales increased 2 percent in May as mortgage rates inched down, stabilizing at its yearlong average. Most of the slowdown is attributed to declining activity for homes priced less than $300,000 due to dwindling inventories. On the other hand, the number of sales for homes priced more than $400,000 improved for the third straight month.

Housing sales also rose on the metropolitan level but extended a downward trend from peak activity a few months earlier. Similar fluctuations across the price spectrum resulted in total sales growth of 2.3 percent in both Austin and Dallas. In San Antonio and Houston, the metric elevated 1.9 and 1.8 percent, respectively. Fort Worth sales, however, flattened amid a severe drop in activity for homes priced less than $250,000. Moreover, the metric dropped 16 percent YTD compared with the statewide contraction of 7.1 percent.

Texas’ average days on market (DOM) fell to a record-breaking 34 days, confirming that demand for housing is still robust, and the YTD decrease in sales is more due to restricted inventory. Austin’s DOM shed more than five weeks off its year-ago reading, plummeting to 18 days, while the average home in North Texas sold after just 25 days in Fort Worth and 26 days in Dallas. San Antonio’s and Houston’s metrics also registered steep declines but hovered closer to the statewide average, falling to 35 and 36 days, respectively.  

Amid low expectations of additional fiscal and monetary stimulus, economic growth forecasts for the rest of the year cooled as the initial and strongest stage of recovery likely reached its peak, and inflation pressures are believed to be temporary. The ten-year U.S. Treasury bond yield stabilized at pre-pandemic levels of 1.6 percent** for the third consecutive month, while the Federal Home Loan Mortgage Corporation’s 30-year fixed-rate ticked down to 3.0 percent. The median mortgage rate within Texas increased in April*** to 3.0 and 3.2 percent for GSE and non-GSE loans, respectively, but, similar to the national headline metric, remained below year-ago levels. After mortgage rate hikes, Texas home-purchase applications declined for the second consecutive month in May, falling 22.1 percent YTD. Refinance applications improved on a monthly basis but were still down 28.8 percent over the same period. Lenders adding more requisites and the shrinking pool of households able to refinance is likely impacting refinance activity as well. (For more information, see Finding a Representative Interest Rate for the Typical Texas Mortgagee.)

In April, the median loan-to-value ratio (LTV) constituting the “typical” Texas conventional-loan mortgage dropped from 87.6 a year ago to 83.8. The debt-to-income ratio (DTI) declined from 36.9 to 34.4, while the median credit score jumped 18 points in the last year to 757. The LTV and DTI for GSE borrowers also decreased from 86.5 and 35.9 last April to 85.7 and 35.3, respectively. Overall improved credit profiles reflect the fact that only the most qualified housing applicants are able to outbid their competition for their desired homes amid exceptionally tight inventories and robust demand.

Prices

The ongoing shift in the composition of sales toward higher-priced homes due to constrained inventories at the lower end of the market supported home-price appreciation. The Texas median home price rose for the fifth consecutive month, accelerating 21.6 percent YOY to a record-breaking $292,100 in May. The share of luxury homes sold in Austin more than doubled to two-fifths compared with this time last year, contributing to the 42.1 percent YOY surge in the median price ($447,200). The Dallas metric ($361,900) increased 25.8 percent while annual price growth in Fort Worth ($298,300) shot up to 24.0 percent in May from 14.4 percent the previous month. Houston’s ($291,700) and San Antonio’s ($271,900) metrics elevated 20.6 and 16.1 percent, respectively.

The Texas Repeat Sales Home Price Index accounts for compositional price effects and provides a better measure of changes in single-family home values. Texas’ index corroborated substantial and unsustainable home-price appreciation, soaring 14.8 percent YOY. The metric skyrocketed 38.4 percent in Austin, followed by North Texas with 18.2 and 16.2 percent home-price appreciation in Dallas and Fort Worth, respectively. San Antonio posted a 15.4 percent annual hike, while Houston’s index registered double-digit growth for the first time since the series started in 2014, elevating 11.4 percent. Increasing home prices pressure housing affordability, particularly in an environment of low wage growth.

Single-Family Forecast

The Texas Real Estate Research Center projected single-family housing sales using monthly pending listings from the preceding period (Table 1). Only one month in advance was projected due to the uncertainty surrounding the COVID-19 pandemic and the availability of reliable and timely data. Texas sales are expected to recover 2.9 percent in June after two consecutive monthly declines. The metric is estimated to rebound 5.3 and 5.2 percent in Austin and San Antonio, respectively, with more moderate increases of 3.0 percent in DFW and 2.2 percent in Houston. Sales through the first half of 2021 should surpass activity during 1H2020, but the rate of growth has decelerated. On the supply side, inventory should improve slightly, possibly reaching a trough, with the forecast predicting a rise in both active and new listings. Constrained inventory has curbed sales during the past few months.

Household Pulse Survey

According to the U.S. Census Bureau’s Household Pulse Survey, the share of homeowners behind on their mortgage payments flattened at 5 percent nationally and within Texas (Table 2). Houston reflected the statewide average, while the metric in DFW hovered higher at 6 percent. The share of Texas respondents who were not current and expected foreclosure to be either very likely or somewhat likely in the next two months ticked down from 26 percent in April to 19 percent (Table 3). The proportion of delinquent individuals who were at risk of foreclosure also declined in North Texas, falling from 33 to 24 percent but increased five percentage points to 20 percent in Houston. Both the Federal Housing Finance Agency’s foreclosure and REO eviction moratoria for properties owned by Fannie Mae and Freddie Mac and the Centers for Disease Control and Prevention’s federal eviction moratorium were recently extended through July 31, 2021. The latter is not expected to be renewed again. Continued stability in the housing market is essential to Texas’ economic recovery.

________________

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

** Bond and mortgage interest rates are nonseasonally adjusted. Loan-to-value ratios, debt-to-income ratios, and the credit score component are also nonseasonally adjusted.

*** The release of Texas mortgage rate data typically lag the Texas Housing Insight by one month.

To see the previous month’s report, click here. For the report from a year ago, click here. 

Previous reports available: 

2021: January, February, March, April , May, June

2020: January, February, March, April, May, June, July, August, September, October, November, December

2019: January, February, March, April, May, June, July, August, September, October, November, December

Source – James P. Gaines, Luis B. Torres, Wesley Miller, Paige Silva, and Griffin Carter (July 13, 2021)

https://www.recenter.tamu.edu/articles/technical-report/Texas-Housing-Insight

 

Housing-Insight-April-2021

Texas Housing Insight – April 2021 Summary

by Real Estate ArticlesResourcesStats

Total Texas housing sales fell 2.5 percent in April on top of a first-quarter decline, confirming that the rapid-fire activity last year has lost momentum. Residential construction loan values decreased during the first three months of the year, but housing starts and building permits picked up in April, pointing to stable construction during the summer. Due to rising supply costs, however, new homes are unlikely to be priced at the lower end of the price spectrum, where inventory is most constrained. Persistent demand for housing amid limited availability at the bottom price cohorts pushed sales toward higher-priced homes. Double-digit home-price appreciation and rising mortgage interest rates chipped away at housing affordability and may dampen housing demand moving forward. The unprecedented low level of inventory available for sale is the greatest challenge to Texas’ housing market, assuming the pandemic remains contained.

Supply*

The Residential Construction Cycle (Coincident) Index, which measures current construction levels, trended upward nationally and within Texas due to increased industry wages, employment, and construction values during April. Moreover, the Texas Residential Construction Leading Index indicated construction activity is expected to strengthen in the coming months as weighted building permits and residential starts elevated and the ten-year real Treasury bill declined. Houston accounted for much of the statewide rise in permits and starts, reversing the local leading index’s downward trend. The leading indexes in North and Central Texas decelerated but continued to suggest stable future activity.

Net residential loans extended a three-quarter decline, inching down 0.7 percent quarter over quarter (QOQ) during the first three months of 2021 due to decreases in both the one-to-four unit and multifamily sectors. Corroborating the data, the Board of Governors of the Federal Reserve System’s Senior Loan Officer Opinion Survey indicated a moderate share of banks tightened standards on construction and land development loans. A modest portion, however, eased standards on multifamily loans. 

Single-family construction permits increased 4.4 percent in April, extending a year-long upward trend despite falling with residential loan values during the first quarter. Houston topped the national list with 5,254 nonseasonally adjusted permits, registering double-digit growth for the second straight month after adjusting for seasonality. On the other hand, activity in the state’s other major metros slowed, although Dallas-Fort Worth still ranked second in the nation, flattening at 4,515 permits. Meanwhile, Austin and San Antonio issued 2,599 and 1,244 permits, respectively. In Texas’ multifamily sector, permits for five-or-more units rebounded after a two-month decline, shifting attention away from two-to-four units.

After a sluggish start to the year, total Texas housing starts recovered above year-end levels, increasing 4.1 percent on a per capita basis. As single-family starts in the southern region of the U.S. decreased for the third consecutive month, Texas’ single-family private construction values plummeted 24.6 percent in real terms during April. Austin values in particular corrected downward after climbing the past year, falling every month since January. Meanwhile, activity in Houston and Dallas-Fort Worth (DFW) normalized to average levels during 2019. San Antonio registered a steep monthly decline, but values continued on an upward trajectory due to strong growth at the beginning of the year.

The number of homes added to the Multiple Listings Service flattened at 2016 oil-bust levels in April as homeowners were reluctant to list their house amid ongoing hesitance of in-person home viewing or of being unable to find another home to buy. Moreover, the pace of sales in the last 12 months was still rapid despite a monthly slowdown to start the second quarter of the year, pulling Texas’ months of inventory(MOI) down to 1.3 months. A total MOI around six months is considered a balanced housing market. Inventory for homes priced less than $300,000 was even more constrained, dropping to 0.9 months. Even the MOI for luxury homes (homes priced more than $500,000), the price range at which inventory was at its most expansive, slid to 2.2 months.

The supply situation in the major metros was even more critical than the statewide metric. Although Austin’s MOI ticked up across all price ranges after an influx of new listings the previous month boosted April’s supply of active listings, the metric was still constrained at just 0.5 months. Inventory flattened at one month in both Dallas and Fort Worth and slipped to 1.2 months in San Antonio. Houston’s overall MOI was greater than the state average at 1.5 months, but the metric for homes priced less than $300,000 slipped below 0.8 months. Depleted inventory is a major headwind to the health of Texas’ housing market.

Demand

Despite healthy demand, total housing sales decreased 2.5 percent in April on top of a first-quarter decline. Much of the slowdown may be attributed to limited inventory for homes priced less than $300,000. Rising mortgage rates also pressured affordability, especially for first-time homebuyers. On the other hand, sales for homes priced more than $400,000 increased for the second straight month.

Housing sales also continued to normalize from accelerated activity over the past year at the metropolitan level. Monthly fluctuations across Dallas’ price spectrum mirrored the state’s, falling 10.3 percent year to date (YTD). Meanwhile, sales in San Antonio and Fort Worth dropped 16.1 and 12.4 percent YTD, respectively, despite positive growth in the luxury-home sector. Luxury-home sales increased by a third relative to year-end levels in Austin, but the overall metric still contracted 8.4 percent. Although Houston sales declined across all price cohorts in April, YTD activity decreased only 4.4 percent.

Texas’ average days on market (DOM) registered a steep drop to just 37 days in April, corroborating robust demand amid steady population growth and favorable economic conditions for higher-income potential homebuyers. In Austin and North Texas, the average home sold even faster, staying on the market only 19 days in the former and 28 and 27 days in Dallas and Fort Worth, respectively. San Antonio’s DOM matched the statewide metric, while Houston’s steadied at 41 days.

National economic data fulfilled expectations from earlier in the year, which were priced into first-quarter interest rates. The ten-year U.S. Treasury bond yield stabilized at pre-pandemic levels of 1.6 percent** in April, while the Federal Home Loan Mortgage Corporation’s 30-year fixed-rate flattened at 3.1 percent. Reflecting the national trend during 1Q2021, the median mortgage rate within Texas inched up to 2.89 and 2.76 percent for GSE and non-GSE loans, respectively, in March***. Amid higher mortgage rates, Texas home-purchase applications slid 17.3 percent YTD in April but remained one-third above year-ago activity. On the other hand, refinance applications decreased 34.1 percent YTD, being more sensitive to mortgage rate fluctuations. Lenders adding more requisites and the shrinking pool of households able to refinance is likely impacting refinance activity as well. (For more information, see Finding a Representative Interest Rate for the Typical Texas Mortgagee.)

In March, the median loan-to-value ratio (LTV) constituting the “typical” Texas conventional-loan mortgage decreased from 85.4 to 83.9. The debt-to-income ratio (DTI) flattened at 35.4, but the median credit score jumped from 753 to 757. The median LTV of the GSE borrower inched up from 85.1 to 85.7 but continued to trend downward, while the DTI dipped from 35.9 to 35.6. Overall improved credit profiles may reflect the fact that only the most qualified housing applicants are able to outbid their competition for their desired homes amid exceptionally tight inventories and robust demand.

Prices

A shift in the composition of sales toward higher-priced homes due to constrained inventories at the lower end of the market contributed to home-price appreciation. The Texas median home price rose for the fourth consecutive month, accelerating 17.3 percent YOY to a record-breaking $289,700 in April. The share of luxury-homes sold in Austin more than doubled to two-fifths compared with this time last year, contributing to the 41.7 percent annual surge in the median price ($451,400). The Dallas metric ($355,400) also increased at a higher rate than the state average, skyrocketing 20.4 percent. The median price elevated 17.5 percent YOY in Houston ($291,300) and 15.2 and 15.1 percent in San Antonio ($275,200) and Fort Worth ($290,300), respectively.

The Texas Repeat Sales Home Price Index accounts for compositional price effects and provides a better measure of changes in single-family home values. Texas’ index corroborated substantial and unsustainable home-price appreciation, soaring 13.5 percent YOY. Austin’s index rose 34.5 percent, followed by North Texas with 11.9 and 15.2 percent home-price appreciation in Dallas and Fort Worth, respectively. Meanwhile, the metric climbed 12.0 percent in San Antonio and 9.2 percent in Houston. Increasing home prices pressure housing affordability, particularly in an environment of mortgage rate hikes and low wage growth.

Single-Family Forecast

The Texas Real Estate Research Center projected single-family housing sales using monthly pending listings from the preceding period (Table 1). Only one month in advance was projected due to the uncertainty surrounding the COVID-19 pandemic and the availability of reliable and timely data. Texas sales are expected to decrease for the second straight month in May, falling around 5 percent. Activity is likely to decline about 5.5 percent in Houston and San Antonio, and drop 7.3 percent in DFW. Austin’s single-family sales are predicted to slump 4.3 percent, normalizing to a more sustainable pace in a low-inventory environment. Nevertheless, sales through the first five months of 2021 should surpass sales during the same period in 2020.

Household Pulse Survey

According to the U.S. Census Bureau’s Household Pulse Survey, only 5 percent of Texas homeowners were behind on their mortgage payments in April, matching the national average (Table 2). The metric within DFW ticked up to 7 percent, but the rate fell to just 3 percent in Houston. The share of Texas respondents who were not current and expected foreclosure to be either very likely or somewhat likely in the next two months, however, rose to 26 percent, the highest since December (Table 3). The proportion of delinquent individuals who were at risk of foreclosure was at an all-time high of 33 percent in North Texas (series starting in the Week 13 survey of Phase 2), although the metric stabilized at 15 percent in Houston. Both the Federal Housing Finance Agency’s foreclosure and REO eviction moratoriums for properties owned by Fannie Mae and Freddie Mac (the Enterprises) and the Centers for Disease Control and Prevention’s federal eviction moratoriums are currently set to expire on June 30, 2021. Continued stability in the housing market is essential to Texas’ economic recovery.

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

** Bond and mortgage interest rates are nonseasonally adjusted. Loan-to-value ratios, debt-to-income ratios, and the credit score component are also nonseasonally adjusted.

*** The release of Texas mortgage rate data typically lag the Texas Housing Insight by one month.

To see the previous month’s report, click here. For the report from a year ago, click here. 

Previous reports available: 

2021: January, February, March, April , May

2020: January, February, March, April, May, June, July, August, September, October, November, December

2019: January, February, March, April, May, June, July, August, September, October, November, December

Source – James P. Gaines, Luis B. Torres, Wesley Miller, Paige Silva, and Griffin Carter (June 14, 2021)

https://www.recenter.tamu.edu/articles/technical-report/Texas-Housing-Insight

May-2021-Blog-Stats-Graphic

May 2021 DFW Area Real Estate Stats

by Real Estate ArticlesResourcesStatsVideo

May 2021 North Texas real estate stats are out and we’ve got the numbers! Our stats infographics include a year over year comparison and area highlights for single family homes and condos broken down by MLS area. We encourage you to share these infographics and video with your sphere.

It’s not only HOT outside, the market is still red hot across all five counties!  New listings were down an average of 15% compared to May of 2020 In Dallas, Tarrant and Rockwall counties, with Collin County enjoying a slightly less comparison of almost 6%. Interestingly, the number of sales are up in every county, along with the averages sales prices rising over 20% in all counties.  It is still a great time to be in the game here in North Texas!  Please reach out to us at Republic Title for helpful resources or visit www.republictitle.com  or download our app!

To see past month’s reports, please visit our resources section here.

For the full report from the Texas A&M Real Estate Research Center, click here. For NTREIS County reports click here.

Slide1

April 2021 DFW Area Real Estate Stats

by Real Estate ArticlesResourcesStatsVideo

April 2021 North Texas real estate stats are out and we’ve got the numbers! Our stats infographics include a year over year comparison and area highlights for single family homes and condos broken down by MLS area. We encourage you to share these infographics and video with your sphere.


We can all feel the heat of the market these days and the active listings on the market in April prove it. Active listings are down over 60% from last year across the five counties of Collin, Dallas, Denton, Rockwall, and Tarrant. Collin, Dallas, Denton, and Tarrant counties saw a slight increase in new listings coming on the market compared to 2020 at an average of 18%. Rockwall’s new listings for April are down approximately 4% compared to 2020. Also of note, the days on market for all five counties is at an average of 22 days, while the average sales prices continue to soar at well over 20%, with Rockwall being the exception, coming in at 16.8%.

 

What a time to sell and buy in North Texas!


To see past month’s reports, please visit our resources section here.


For the full report from the Texas A&M Real Estate Research Center, click here. For NTREIS County reports click here.

Housing-Insight-March-2021

Texas Housing Insight – March 2021 Summary

by Real Estate ArticlesResourcesStats

Total Texas housing sales fell 6.4 percent during the first quarter amid rising mortgage rates and weather-related disruptions that dampened business activity in February. Most of the quarterly decline was attributable to decreased resale transactions priced less than $400,000, offsetting elevated luxury home sales in the existing-home market and overall new-home sales. Texas’ homeownership rate improved, although the proportion of owner-occupied units in the major metros persisted below the national and state average. Overall housing demand remained healthy but was constrained by depleted inventories, pushing median home-price growth into double-digit territory. Supply-side indicators corrected downward from record activity in the fourth quarter of 2020 but remained generally positive compared with year-ago levels. The unprecedented low level of inventory available for sale is the greatest challenge to Texas’ housing market, assuming the pandemic remains contained.

Supply*

The Texas Residential Construction Cycle (Coincident) Index, which measures current construction levels, increased to its highest level in a year due to improved industry employment, wages, and construction values. Construction activity is expected to remain strong in the coming months as indicated by the Residential Construction Leading Index, which rose to an all-time high in March amid elevated weighted building permits and housing starts, offsetting growth in the ten-year real Treasury bill. Similarly, the leading indexes in North and Central Texas trended upward, but Houston’s metric continued to decline, suggesting an impending slowdown in construction.

According to Zonda, the number of new vacant developed lots (VDLs) fell 12.2 percent during first quarter 2021, normalizing around its two-year average after record activity to end the year and the winter storm disruption in February. Austin accounted for most of the quarterly decline as VDLs intended for homes priced less than $300,000 plummeted. The metric in Dallas-Fort Worth (DFW) and San Antonio also decreased but remained above year-ago levels. Conversely, Houston VDLs still fell short of 1Q2020 numbers despite increasing for the second straight quarter following depressed activity last year, mainly at the bottom of the price spectrum.    

Quarterly fluctuations in single-family construction permits reflected movements in VDLs, although the metric increased 9.8 percent on a monthly basis. Houston and DFW topped the national list and accounted for most of the state’s improvement, issuing 5,142 and 4,875 nonseasonally adjusted permits, respectively. Similar to VDLs, San Antonio was the only major metro to maintain an upward trend as permits rose to 1,474. Austin’s metric posted a record-breaking 2,428 permits but ticked up modestly after adjusting for seasonality. On the other hand, a strong start to the year pushed Texas’ multifamily permits up 28.2 percent quarter over quarter (QOQ), offsetting monthly declines in February and March.

As lumber prices doubled compared with year-ago levels and Winter Storm Uri caused utility outages across the state, total Texas housing starts flattened on a quarterly basis. Zonda data revealed that single-family housing starts also inched down from its post-Great Recession high of 34,600 groundbreakings in 4Q2020 but remained elevated 25.1 percent year over year (YOY). Single-family starts in North Texas and San Antonio declined QOQ, but activity increased in Austin and Houston for homes priced more than $300,000.

Single-family private construction values decreased every month this year to date, dropping 4.7 percent QOQ in real terms. Only Houston construction values improved in March, although the metric still fell on a quarterly basis. Values in DFW and San Antonio sank for the second straight month, normalizing from record levels at the start of the year. Austin also registered a monthly contraction, but the metric posted the smallest quarterly decline out of the major metros, just 2.7 percent.

The number of homes added to the Multiple Listings Service rebounded in March after plunging during the winter storm. Sales also picked up and even outpaced the influx of new listings, pulling Texas’ months of inventory(MOI) down to an all-time low of 1.4 months. A total MOI around six months is considered a balanced housing market. Inventory for homes priced less than $300,000 was even more constrained, dropping to just one month. Even the MOI for luxury homes (homes priced more than $500,000), the price range at which inventory was at its most expansive, slid to 2.4 months.

The supply situation in the major metros was even more critical than the statewide metric. Austin’s MOI fell below 0.4 months, while the metric ticked down to one month in both Dallas and Fort Worth and 1.3 months in San Antonio. Although Houston’s overall MOI was greater than the state average at 1.6 months, inventory for homes priced less than $300,000 slipped below 0.9 months. Depleted inventory is a major headwind to the continued health of Texas’ housing market.

Demand

Sales picked up in March after the weather-related decline the previous month, but total housing sales fell 6.4 percent QOQ amid rising mortgage rates. Activity for homes priced less than $400,000 offset quarterly growth of 12.2 percent in the luxury-home sector. The overall decrease was concentrated in the resale market where DFW and Austin posted double-digit quarterly contractions. The latter, however, along with San Antonio and Houston, maintained substantial growth relative to 1Q2020 sales.

In contrast to decreased quarterly sales in the existing-home market, Zonda data revealed positive sales growth in all four of the major metros’ new-home sectors. New-home sales in Austin rose for the third consecutive quarter to a record 5,900 sales despite reduced transactions for homes priced less than $300,000. Similar decreases at the bottom price range in North Texas, at least partially due to climbing construction costs, resulted in just 1.1 percent overall YOY growth, matching the existing-home sales annual increase. Houston and San Antonio new-home sales, however, jumped 10.8 and 5.9 percent QOQ, respectively.

Amid recovering economic conditions and overall robust sales activity, Texas’ homeownership rate rose to 65.8 percent, about even with the U.S. rate, per the Census Bureau’s Current Population Survey/Housing Vacancy Survey. Nationally, homeownership decreased for white households but improved for Black households, households of other races, and householders of ages 35 to 44 years. Although homeownership in Texas’ major metros increased, rates persisted below the state and national average. Once the state leader with nearly three-quarters of total housing units owner-occupied in 3Q2020, Austin posted a homeownership rate of just 64.9 percent in 1Q2021. The metric ticked up to 64.8 percent in DFW, while climbing to 65.2 and 65.4 percent in San Antonio and Houston, respectively, after two quarterly declines. Homeownership rates, however, could decline in 2021 as COVID-19 foreclosure-protection policies expire.

Texas’ average days on market (DOM) continued to trend downward after a brief two-month increase around the economic shutdown last spring, falling below 42 days. Austin registered the most drastic decline from year-ago levels as robust demand cut the DOM in half to 25 days. The metric in North Texas sank to an unprecedented 32 and 28 days in Dallas and Fort Worth, respectively. Meanwhile, the average home in Houston and San Antonio sold at a rate closer to the state measure, staying on the market for 41 days.

Climbing oil prices, accelerating vaccination rates, and optimistic national economic data during the first quarter resulted in higher growth and inflation expectations for 2021. The ten-year U.S. Treasury bond yield increased to 1.6 percent** in March, recovering to pre-pandemic levels. The Federal Home Loan Mortgage Corporation’s 30-year fixed-rate rose for the third straight month from a record low at year-end to 3.1 percent (series starting in 1971). Further increases in mortgage rates this year may soften housing demand and slow home-price appreciation.

Within Texas, the median mortgage interest rate inched up to 2.68 and 2.83 percent for GSE and non-GSE loans, respectively, in February***. Meanwhile, home-purchase applications remained down 12.4 percent year to date (YTD) after just a slight increase in March from reduced activity the month prior during the winter storm. The YOY comparison, however, was still in double-digit growth territory. Refinance applications fell more than 20 percent on both a YTD and YOY basis, being more sensitive to mortgage rate fluctuations. Two factors are likely impacting refinance activity: lenders adding more requisites and the shrinking pool of households able to refinance. (For more information, see Finding a Representative Interest Rate for the Typical Texas Mortgagee.)

In February, the median loan-to-value ratio (LTV) and debt-to-income ratio (DTI) constituting the “typical” Texas conventional-loan mortgage decreased from 86.5 to 83.9 and 35.7 to 35.0, respectively. Moreover, the median credit score jumped from 748 to 755. This improved credit profile may reflect the fact that only the most qualified housing applicants are able to outbid their competition for their desired homes amid exceptionally tight inventories and robust demand. Conversely, the median LTV and DTI of the GSE borrower ticked up to 85.9 and 36.3, respectively, as Fannie Mae’s 1Q2021 Mortgage Lender Sentiment Survey reported purchase mortgage demand over the past three months fell for GSE-eligible and government loans. The metrics, however, flattened around their two-year averages.

Prices

A shift in the composition of sales toward higher-priced homes due to constrained inventories at the lower end of the market contributed to home-price appreciation. The Texas median home price accelerated 14.1 percent YOY to a record-breaking $283,200 in March. Homes priced more than $300,000 comprised more than four-fifths of total sales in Austin, resulting in the median price ($424,100) skyrocketing 28.8 percent. The metric also posted annual growth above the state average in Dallas ($341,300) and Houston ($288,200), elevating 15 percent in the former and 16 percent in the latter. The Fort Worth ($285,300) and San Antonio ($266,100) median price inched down from all-time highs the previous month but still increased 14.4 and 11.5 percent YOY, respectively.  

The Texas Repeat Sales Home Price Index accounts for compositional price effects and provides a better measure of changes in single-family home values. Texas’ index corroborated substantial and unsustainable home-price appreciation, averaging annual growth of 10.4 percent in 1Q2021. The metric surged 22.6 percent in Austin, followed by North Texas with 11.5 and 10.8 percent home-price appreciation in Dallas and Fort Worth, respectively. In San Antonio, the index increased 9.9 percent. Houston’s metric rose by a relatively moderate 7.8 percent, less than the average price appreciation in 2014 but still exceeding income growth and affecting affordability.

Declining mortgage rates offset accelerating home-price appreciation in 2020. Increasing interest rates during 1Q2021, however, combined with double-digit home-price growth, chipped away at housing affordability. Austin registered the most drastic drop as the index sank from 1.69 in 1Q2020 to 1.57, indicating that a family earning the median income could afford a home 57 percent more than the median sale price. The Fort Worth and Houston indexes decreased for three straight quarters to 1.81 and 1.79, respectively, hovering around their year-ago readings. On the bright side, the metric inched up to 1.66 in Dallas and 1.78 in San Antonio. Continued improvement is important to Texas’ demographic advantages that have supported the state’s economic prosperity over the past decade.

Single-Family Forecast

The Texas Real Estate Research Center projected single-family housing sales using monthly pending listings from the preceding period (Table 1). Only one month in advance was projected due to the uncertainty surrounding the pandemic and the availability of reliable and timely data. Texas sales are expected to decrease 2.6 percent in April from March. Of the major metros, Houston and San Antonio are predicted to bear the brunt of the decline with the metric falling 3.3 and 1.9 percent, respectively. Meanwhile, single-family sales in Austin and North Texas will likely flatten around March levels. Still, activity through the first four months of 2021 should surpass sales during the same period in 2020.

Household Pulse Survey

According to the U.S. Census Bureau’s Household Pulse Survey, only 5 percent of Texas homeowners were behind on their mortgage payments in March, the smallest proportion since July (Table 2). The metric within Texas’ largest metropolitan areas, however, hovered higher at 6 and 7 percent in DFW and Houston, respectively. The share of Texas respondents who were not current and expected foreclosure to be either very likely or somewhat likely in the next two months fell to 10 percent, lower than the national rate of 15 percent (Table 3).

The proportion of delinquent individuals who were at risk of foreclosure decreased in North Texas to 5 percent but ticked up to 9 percent in Houston, although the metric remained improved from its one-third reading from the Week 26 survey. The Federal Housing Finance Agency’s foreclosure and REO eviction moratoriums for properties owned by Fannie Mae and Freddie Mac (the Enterprises) are currently extended through June 30, 2021. The Centers for Disease Control and Prevention renewed its federal eviction moratorium through the second quarter. Continued stability in the housing market is essential to Texas’ economic recovery.

________________

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

** Bond and mortgage interest rates are nonseasonally adjusted. Loan-to-value ratios, debt-to-income ratios, and the credit score component are also nonseasonally adjusted.

*** The release of Texas mortgage rate data typically lag the Texas Housing Insight by one month.

 

Source – James P. Gaines, Luis B. Torres, Wesley Miller, Paige Silva, and Griffin Carter (May 13, 2021)

https://www.recenter.tamu.edu/articles/technical-report/Texas-Housing-Insight

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March 2021 DFW Area Real Estate Stats

by Real Estate ArticlesResourcesStatsVideo

The March 2021 DFW area real estate statistics are in and we’ve got the numbers! Our stats infographics include a year over year comparison and area highlights for single family homes and condos broken down by MLS area. We encourage you to share these infographics and video with your sphere.

To see past month’s reports, please visit our resources section here.

For the full report from the Texas A&M Real Estate Research Center, click here. For NTREIS County reports click here.

Housing-Insight-Feb-2021

Texas Housing Insight – February 2021 Summary

by Real Estate ArticlesResourcesStats

Total Texas housing sales plummeted 16.1 percent in February as Winter Storm Uri swept across the state, causing widespread power and water outages. Before the freeze, however, sales were at record levels and should rebound in March as indicated by the Texas Real Estate Research Center’s single-family sales forecast. The number of new homes added to the Multiple Listings Service (MLS) was also negatively affected by the wintery weather, exacerbating the limited supply issue. Building permits and housing starts decreased on a monthly basis but remained elevated overall, which bodes well for construction activity this year. Additionally, improved economic growth and inflation expectations contributed to rising mortgage interest rates, the continuation of which may slow the current breakneck pace of sales. Depleted inventory is the greatest challenge to Texas’ housing market, assuming the pandemic remains contained.     

Supply1

The Texas Residential Construction Cycle (Coincident) Index, which measures current construction levels, ticked up as industry employment and wages improved. The Residential Construction Leading Index also continued its upward trajectory due to overall elevated building permits and housing starts despite monthly contractions, pointing toward increased construction in the coming months. Similarly, the metropolitan leading indexes suggested future activity to be favorable. Only in Houston, where permits and starts fell significantly, did the metric indicate an impending slowdown in building.

Single-family construction permits declined for the second straight month in February, dropping 12.4 percent. Nevertheless, issuance exceeded its 2006 average and elevated 20.8 percent compared with last year on a year-to-date (YTD) basis. Dallas-Fort Worth continued to lead the nation with 3,796 nonseasonally adjusted permits, followed by Houston at 3,395 permits. Issuance in Austin decreased to 1,862 permits but still remained well above pre-Great Recession levels. Although San Antonio’s metric ticked down to 1,000 permits, the overall trend persisted upward. Similarly, Texas’ multifamily permits sank 11.5 percent; year-over-year comparisons, however, were largely positive.

Amid rising lumber prices and utility outages across the state, total Texas housing starts fell 6.2 percent. Single-family private construction values decreased 13.3 percent in real terms after flattening the previous month. Monthly fluctuations in Houston construction values reflected broader movements in the statewide metric, while Austin and Dallas values normalized from record activity. San Antonio values also corrected downward in February after increasing by a third of December levels, flattening at its year-long average.

Although sales declined, the number of new MLS listings plunged to its lowest measure since the economic shutdown last spring, pushing Texas’ months of inventory (MOI) down to an all-time low of 1.5 months. A total MOI around six months is considered a balanced housing market. Inventory for homes priced less than $300,000 was even more constrained, dropping below 1.2 months. Even the MOI for luxury homes (homes priced more than $500,000) slid to 2.7 months compared with 5.8 months a year ago.

The supply situation in Austin and North Texas was even more critical than the statewide metric. Inventory expanded minimally in Austin’s mid-range price cohorts, but the overall MOI flattened at 0.5 months. Meanwhile, Dallas and Fort Worth’s metric fell to 1.1 and 1.0 months, respectively. On the other hand, the Houston MOI remained highest out of the major metros despite ticking down to 1.9 months. Fluctuations in San Antonio inventory matched the state average.

Demand

After a solid start to the year, total housing sales decreased 16.1 percent in February during severe disruptions to the state’s power grid due to the winter storm. Activity declined across the price spectrum from record transactions the month prior for all but the bottom price cohort (less than $200,000). Still, luxury home sales remained in positive YTD growth territory. The sales composition continued with shift toward homes priced more than $300,000 due to depleted inventory and rising building costs.

Luxury home transactions remained positive YTD in the major Metropolitan Statistical Areas (MSAs). Nevertheless, total sales fell 18.3 and 19.7 percent in San Antonio and Houston, respectively, and trended downward in Austin and North Texas. Austin sales plummeted 23.6 percent, but the list-to-sale-price ratio climbed above 1.0 for the fourth consecutive month, indicating especially robust demand. Dallas sales sank 13.1 percent on top of revisions to January data that revealed only modest improvement at the start the year after a sluggish fourth quarter. Fort Worth was the exception, with activity down from year-end levels across the price spectrum. Moreover, total sales declined for the second straight month, registering a 15.3 percent drop in February.

Although Texas’ average days on market (DOM) flattened at 42 days, it still hovered at an all-time low and shed more than two weeks off its year-ago reading, corroborating strong demand as low mortgage rates remained favorable to homebuyers. The metric also stabilized across the major metros, albeit at lower levels in markets of exceptionally low inventory where available listings were snapped up after just 26 days in Austin and 33 and 30 days in Dallas and Fort Worth, respectively. The average home in Houston and San Antonio sold at a rate closer to the state measure, staying on the market for 41 days in Houston and 44 days in San Antonio.

Progress on the vaccine front and an approved third fiscal stimulus package resulted in higher growth and inflation expectations for 2021. The ten-year U.S. Treasury bond yield rose to an annual high of 1.3 percent2 in February. The Federal Home Loan Mortgage Corporation’s 30-year fixed-rate ticked up for the second straight month to 2.8 percent, although the metric still hovered around historically low rates (series starting in 1971). Further increases in mortgage rates this year may soften housing demand and slow home-price appreciation. Mortgage rates remained low within Texas during January3, sinking to 2.66 percent for non-GSE loans, while the median interest rate for GSE loans was 2.80 percent. February home-purchase applications were affected by the winter storm, falling 14.8 percent YTD but remaining positive relative to year-ago levels. Similar fluctuations were observed in refinance activity as lenders added more requisites and the pool of households able to refinance shrank. (For more information, see Finding a Representative Interest Rate for the Typical Texas Mortgagee.)

Prices

Although sales activity slowed during the winter storm, the Texas median home price continued to post strong growth, accelerating 13.2 percent year over year (YOY) to $280,400. A shift in the composition of sales toward higher-priced homes due to constrained inventories at the lower end of the price spectrum contributed to the rise in prices. In Austin and Dallas, where the luxury home market share increased by more than 10 percentage points from last February, the median home price skyrocketed by a record 22.4 and 16.9 percent annually to $398,700 and $344,500, respectively. The Fort Worth metric ($287,900) also rose by an unprecedented 15.7 percent YOY, while San Antonio’s ($268,200) and Houston’s ($281,700) median home prices elevated 11.0 and 12.2 percent, respectively.

The Texas Repeat Sales Home Price Index accounts for compositional price effects and provides a better measure of changes in single-family home values. The index corroborated increased home-price appreciation, climbing 10.4 percent YOY, but the rate was less than the surge in the median home price suggested. Houston’s metric rose by a relatively moderate 7.5 percent, less than the average price appreciation in 2014. The Dallas and Fort Worth indexes jumped 11.4 and 11.7 percent, respectively. On the other hand, the index in Central Texas was more or less in line with median price growth, soaring 23.3 percent in Austin and 10.4 percent in San Antonio. Home-price appreciation unmatched by income improvement will continue to chip away at housing affordability in 2021, especially as mortgage rates rise.

Single-Family Forecast

The Texas Real Estate Research Center projected single-family housing sales using monthly pending listings from the preceding period (Table 1). Only one month in advance was projected due to the uncertainty surrounding the COVID-19 pandemic and the availability of reliable and timely data. Texas sales are expected to rebound 12.1 percent in March from the impacts of the winter storm that swept across the state in February. The recovery in Houston and San Antonio is predicted to surpass the state average as single-family sales improve about 17.0 and 13.2 percent, respectively. Austin and DFW sales activity will likely be more subdued, but first quarter transactions should still exceed 1Q2020 levels.

Household Pulse Survey

According to the U.S. Census Bureau’s Household Pulse Survey, 8 percent of Texas homeowners were behind on their mortgage payments during February, greater than the national share of 7 percent and an uptick from the previous month (Table 2). The metric also inched up within Texas’ largest metropolitan areas to 6 and 11 percent in DFW and Houston, respectively. The share of Texas respondents who were not current and expected foreclosure to be either very likely or somewhat likely in the next two months, however, rose only incrementally to 13 percent (Table 3). The proportion of delinquent individuals who were at risk of foreclosure decreased to just 9 percent in North Texas but jumped to one-third in Houston. The increase may be associated with negative economic impacts from the winter storm during February. The Federal Housing Finance Agency’s foreclosure and REO eviction moratoriums for properties owned by Fannie Mae and Freddie Mac (the Enterprises) are currently extended through June 30, 2021. After the survey was taken, the Center for Disease Control and Prevention also renewed its federal eviction moratorium through the end of June. Continued stability in the housing market is essential to Texas’ economic recovery.

________________

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

2 Bond and mortgage interest rates are nonseasonally adjusted. Loan-to-value ratios, debt-to-income ratios, and the credit score component are also nonseasonally adjusted.

3 The release of Texas mortgage rate data typically lag the Texas Housing Insight by one month.

Source – James P. Gaines, Luis B. Torres, Wesley Miller, Paige Silva, and Griffin Carter (April 12, 2021)

https://www.recenter.tamu.edu/articles/technical-report/Texas-Housing-Insight

Housing-Insight-Jan-2021

Texas Housing Insight – January 2021 Summary

by Real Estate ArticlesResourcesStats

Total Texas housing sales kicked off the year with a 3 percent improvement, surpassing 38,500 sales to an all-time high. Fort Worth was the only major region within the state where the metric decreased relative to December 2020, although the trend in activity across both sections of the North Texas Metroplex flattened. On the supply side, inventory fell to critically low levels, while new construction indicators stumbled. Combined with dwindling listings, solid demand during low mortgage rates pushed median home price growth up by double-digit percentage increases. Overall, housing demand is expected to remain healthy in 2021 as vaccine rollouts continue, and the approval of a third federal stimulus package aids the economic recovery. Depleted inventory is the greatest challenge to Texas’ housing market, assuming the pandemic is contained.     

Supply*

The Texas Residential Construction Cycle (Coincident) Index, which measures current construction levels, ticked up as construction values, employment, and wages improved. The Residential Construction Leading Index also continued on an upward trajectory due to overall elevated building permits and housing starts despite a monthly contraction in January, pointing toward higher construction activity in the coming months. Similarly, the metropolitan leading indexes indicated future activity to be favorable. Only in Houston did the metric flatten.

Recently released fourth-quarter private bank loan data indicated net residential loans decreased 1.1 percent quarter over quarter (QOQ) at the end of 2020 after lending standards tightened throughout the year due to pandemic-related economic uncertainty. Construction investment for one-to-four units led with a third consecutive quarterly decline. Large multifamily projects (buildings consisting of five or more units) flattened at its 2Q2020 series high of $8.9 billion.

Single-family construction permits dropped 8.1 percent from a record high in December. Austin issued 1,940 nonseasonally adjusted permits, exceeding its 2006 average in per capita terms, as did Dallas-Fort Worth. The metro topped the national list with 4,330 permits despite declining in January after adjusting for seasonality. Houston’s metric also stabilized after a strong end to the year, resulting in 4,258 permits. On the other hand, issuance in San Antonio increased for the fifth consecutive month to more than 1,200 permits. In Texas’ multifamily sector, permits trended upward after sluggish activity in 2020 when the pandemic shifted focus away from the apartment sector.

Although the Department of Commerce lowered tariffs on Canadian lumber from 20 to 9 percent at year end, lumber prices increased for the second straight month to an unprecedented level in January. Amid rising homebuilder costs, total Texas housing starts fell 4.8 percent as the single-family sector accounted for reduced activity in the southern region of the U.S. Lumber prices are expected to remain volatile in 2021, pressuring housing affordability in conjunction with robust housing demand. Reflecting monthly fluctuations in starts, single-family private construction values decreased 8.5 percent. The metric declined in DFW and Houston but ticked up in Central Texas.

Increased sales and a downward correction in new listings after activity recovered in the second half of 2020 pulled Texas’ months of inventory (MOI) down to an all-time low of 1.7 months. A total MOI around six months is considered a balanced housing market. Inventory for homes priced less than $300,000 was even more constrained, dropping below 1.3 months. Even the MOI for luxury homes (homes priced more than $500,000) slid to 3.2 months compared with 6.1 months a year ago.

The supply situation in Austin was especially critical, with the MOI trending down for two consecutive years to just half a month. Despite modest expansions in San Antonio’s and Houston’s inventory for homes priced less than $200,000, the overall metric fell to 1.7 and 2.2 months, respectively. In Fort Worth, the MOI ticked down to 1.2 months as contractions in the supply of active listings offset slower sales activity. The Dallas metric was not far behind, slipping to 1.3 months.

Demand

Total housing sales rose 3 percent to a record high in January after slumping the previous two months. Activity increased across the price spectrum, while sales for homes priced less than $300,000 ticked up for the second straight month. Nonseasonally adjusted transactions at the bottom price cohort (less than $200,000), however, fell to the lowest level in the series’ January history, with more than half occurring outside the major metros. The downward trend corroborates the shift in sales to higher-priced homes due to depleted inventory and rising building costs.

San Antonio and Houston sales extended strong upward trends to kick off the year, climbing 4.2 and 6.9 percent, respectively. Austin’s metric elevated 7.3 percent, while the metro’s list-to-sale-price ratio registered above 1.0 for the third straight month, confirming robust demand despite sales falling the previous two months. Dallas transactions also increased after sluggish activity in 4Q2020, accelerating 4.4 percent in January. Levels, however, remained down from October 2020 all-time high. Fort Worth was the exception as sales declined 2.3 percent due to decreased activity in the bottom cohort following a brief pick up at year end.

Texas’ average days on market (DOM) reached an all-time low of 43 days, corroborating strong demand as low mortgage rates remained favorable to homebuyers. Austin’s DOM shed almost a month off its year-ago reading, falling to 28 days. The other metros dropped more than two weeks from January 2020 levels, although the metric in Dallas ticked up slightly from the previous month to 36 days. The Houston DOM inched down to 41 days while the average home in San Antonio and Fort Worth sold after 44 and 30 days, respectively.

Vaccine rollouts and optimism regarding a third fiscal stimulus package resulted in higher growth and inflation expectations for 2021. The ten-year U.S. Treasury bond yield rose to 1.1 percent1 in January, its highest level since February 2020. The Federal Home Loan Mortgage Corporation’s 30-year fixed-rate ticked up for the first time in a year to 2.7 percent, although the metric still hovered around its historically low rate recorded at year-end (series starting in 1971). Anticipated increases in mortgage rates this year may soften housing demand. Mortgage rates slid to decades-low levels within Texas during January, sinking to 2.66 percent for non-GSE loans, while the median interest rate for GSE loans was 2.80 percent. Home-purchase applications boomed more than 20 percent in 2020, but activity softened to start the new year. Refinance applications also stabilized after doubling the previous year. The pace is expected to decelerate as the lenders add more requisites and the pool of households able to refinance shrinks. (For more information, see Finding a Representative Interest Rate for the Typical Texas Mortgagee.)

In January, the median loan-to-value ratio (LTV) and debt-to-income ratio (DTI) constituting the “typical” Texas conventional-loan mortgage increased from 84.5 to 85.8 and 34.5 to 35.3, respectively. The median credit score fell from 756 to 750 but still remained elevated relative to 2019 levels due to the rise in average consumer credit scores from relief actions taken by the federal government and lenders who helped some households pay off debt and save money. The metrics of the typical Texas borrower who obtained a loan from a government-sponsored enterprise (GSE) stabilized at 85.4 for the median LTV and 35.8 for the median DTI.

Prices

Solid housing demand and depleted inventory resulted in multidecade high home-price growth. The Texas median home price accelerated 12.6 percent year over year (YOY) to $277,900. A shift in the composition of sales toward higher-priced homes due to constrained inventories at the lower end of the price spectrum contributed to the rise in prices. All four major metros experienced double-digit home-price appreciation, but Austin led with a 19.7 percent increase to $379,700. The Dallas median price reached $336,200 after jumping 12.2 percent YOY while the San Antonio metric surged 13.4 percent to $265,600. Movements in Fort Worth’s ($280,000) and Houston’s ($276,200) median price were similar, elevating 11.4 and 11.5 percent, respectively.

The Texas Repeat Sales Home Price Index accounts for compositional price effects and provides a better measure of changes in single-family home values. The index corroborated increased home-price appreciation amid robust housing activity, rising 9.5 percent YOY, but the rate of growth was still less than the surge in the median home price suggested. On the metropolitan level, each index accelerated YOY with Austin’s metric booming 17.6 percent. Home-price appreciation in Dallas also exceeded the state average at 9.7 percent. In Fort Worth and San Antonio, the index jumped 9.1 and 8.7 percent, respectively, followed by the Houston metric at a 7.6 percent clip. Home-price appreciation unmatched by income growth will continue to chip away at housing affordability in 2021, especially as mortgage rates increase.

Single-Family Forecast

The Texas Real Estate Research Center projected single-family housing sales using monthly pending listings from the preceding period (Table 1). Only one month in advance was projected due to the uncertainty surrounding the COVID-19 pandemic and the availability of reliable and timely data. Texas sales are expected to decrease 14.2 percent in February from activity in January due to impacts of the winter storm that swept across the state. Declines in North Texas and San Antonio activity are predicted to hover close to the state average, but Houston and Austin transactions may drop around 17.5 and 20.5 percent, respectively.

Household Pulse Survey

According to the U.S. Census Bureau’s Household Pulse Survey, 6 percent of Texas homeowners were behind on their mortgage payments during January, less than the national share of 7 percent (Table 2). Within Texas’ largest metropolitan areas, the metric declined compared with the previous month, falling to 5 and 8 percent in DFW and Houston, respectively. Moreover, only 12 percent of the respondents in Texas who were not current expected foreclosure to be either very likely or somewhat likely in the next two months compared with just 17 percent nationwide (Table 3). The proportion of delinquent individuals who were at risk of foreclosure ticked up to 15 percent in North Texas but flattened at 14 percent in Houston. Just after the survey was taken, the Federal Housing Finance Agency extended the foreclosure and REO eviction moratoriums for properties owned by Fannie Mae and Freddie Mac (the Enterprises) until June 30, 2021. Eligible borrowers were also granted an additional three-month extension of forbearance for a total of up to 18 months of forbearance. The Center for Disease Control’s federal eviction moratorium is set to expire at the end of March. Continued stability in the housing market is essential to Texas’ economic recovery.

________________

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

1 Bond and mortgage interest rates are nonseasonally adjusted. Loan-to-value ratios, debt-to-income ratios, and the credit score component are also nonseasonally adjusted.

Source – James P. Gaines, Luis B. Torres, Wesley Miller, Paige Silva, and Griffin Carter (March 18, 2021)

https://www.recenter.tamu.edu/articles/technical-report/Texas-Housing-Insight

February 2021 DFW Area Real Estate Stats

by Real Estate ArticlesResourcesStatsVideo

The February 2021 DFW area real estate statistics are in and we’ve got the numbers! Our stats infographics include a year over year comparison and area highlights for single family homes and condos broken down by MLS area. We encourage you to share these infographics and video with your sphere.

To see past month’s reports, please visit our resources section here.

For the full report from the Texas A&M Real Estate Research Center, click here. For NTREIS County reports click here.

Texas Housing Insight – 2020 Annual Summary

by Real Estate ArticlesResourcesStats

The Texas housing market was off to a solid start at the beginning of 2020 as mortgage interest rates declined. Sales activity plummeted in March and April, however, due to the emergence of COVID-19 and a mandated economic shutdown across the state. Nevertheless, homebuying demand accelerated during the summer for those less affected by the pandemic as remote-work-and-school spaces prompted the desire for additional space in the house, interest rates continued to fall, and more millennials entered the housing market. Almost 393,200 homes were sold through the Multiple Listing Services (MLS) during 2020, a near double-digit percentage increase from activity the previous year. On the other hand, homeowners were cautious about listing their homes on the market and hosting in-person showings, contributing to a plummet in available inventory, particularly for homes priced less than $300,000. In an environment of robust demand and shrinking supply, home-price appreciation surged, pressuring housing affordability.

The same factors that defined 2020 will remain relevant in the new year. The housing market will continue to be characterized by strong demand but constrained inventory and substantial price growth. Nevertheless, the Texas Real Estate Research Center expects single-family sales to increase 8.4 percent in 2021. Containment of the coronavirus and government support is essential for a positive economic and housing outlook during ongoing pandemic-related uncertainty. (For additional commentary, see the 2021 Texas Housing & Economic Outlook.)

Supply*

The Texas Residential Construction Cycle (Coincident) Index, which measures current construction activity, flattened in 2020 as industry hiring was sluggish during the pandemic. The Texas Residential Construction Leading Index, however, reached an all-time high in 2020 due to record low interest rates and strong building permits and housing starts, indicating construction activity will pick up in the new year. These metrics in Texas’ major Metropolitan Statistical Areas (MSAs) trended upward, especially in Austin and Houston, supporting a positive outlook.

In response to supply shortages, developers accelerated activity at the earliest stage of the construction cycle. According to Zonda, formally known as MetroStudy, the number of new vacant developed lots (VDLs) in the Texas Urban Triangle elevated 8.8 percent annually in 2020 to reach 116,500, four-fifths of 2006 levels. Lot development in Houston and San Antonio rose for the third straight year, climbing 12.0 and 29.8 percent, respectively, with improvement in all price ranges except for homes priced less than $200,000. Dallas-Fort Worth (DFW) activity rebounded 4.5 percent after contracting in 2019, but the increase was limited to the upper-end of the price spectrum. Meanwhile, Austin’s metric normalized after skyrocketing the previous year.

Strong lot development was matched by a near-record 153,600 single-family housing construction permits issued in Texas. The statewide metric accelerated 21.9 percent and comprised 16 percent of the national total during 2020. Austin posted an all-time high of 21,400 permits while the growth rate in DFW exceeded the state average at 24.2 percent to issue more than 43,500 permits. Activity in Houston and San Antonio increased by one-fifth, resulting in 48,100 and 10,700 permits, respectively.

Total Texas housing starts fell into double-digit negative growth territory during the first half of the year amid pandemic-related declines in activity. Despite soaring lumber prices, the metric rebounded strongly in the third quarter, pushing overall annual improvement up 9.5 percent. Per Zonda, single-family starts in the Texas Urban Triangle rose 18.9 percent, largely due to increased activity in the $200,000-$400,000 price range as starts for homes priced less than $200,000 stepped back after a brief reprieve the previous year due to rising construction costs. Single-family starts in North Texas and Houston skyrocketed 21.0 and 20.2 percent, respectively. San Antonio starts sustained strong growth, jumping 19.2 percent. Although the pace decelerated in Austin, the metro still started more than 21,300 single-family homes, leading the Texas Urban Triangle in per capita terms. Tariffs on Canadian lumber were reduced from 20 to 9 percent in December, providing some relief to construction costs in 2021, although lumber prices remain extremely high.

Even with the economic shutdown in spring, $37.9 billion of new construction poured into Texas’ single-family market amid growing demand stemming from population growth and a shift in preferences for more livable space. Single-family private construction values climbed 13.9 percent annually after adjusting for inflation. Similar to other supply-side indicators, DFW and Houston accounted for the majority of the statewide increase after sluggish activity in 2019. Austin recorded a decade of growth while San Antonio posted double-digit percent improvement for the second consecutive year.

Robust demand and a decline in the number of new MLS listings contributed to the first annual decrease in active listings since 2015, pulling Texas’ total months of inventory (MOI) down to 1.7 months. A total MOI of around six to 6.5 months is considered a balanced housing market. Inventory fell across all price cohorts, but the metric for homes priced less than $300,000 averaged just 1.3 months. Even the MOI for luxury homes (priced more than $500,000) sank from 5.0 to 2.9 months as constrained supply at the lower end of the price spectrum pushed buyers toward higher-priced homes.

Inventory was most depleted in Austin where the MOI plummeted below 0.6 months. The North Texas metric slid below the state average, falling to 1.2 and 1.1 months in Dallas and Fort Worth, respectively. Houston’s MOI sank for the second straight year to two months but remained the most elevated out of the major MSAs. San Antonio inventory hovered above the statewide metric, although the metro was still supply-limited with an MOI of 1.7 months.

Demand

More than 393,100 Texas homes sold through MLSs in 2020, a 9.4 percent increase over the previous year. The surge in homebuying highlighted the disparate impacts of the pandemic across the socioeconomic spectrum; in general, families who bought a house were more likely to be able to work from home and keep their jobs during the pandemic compared with many lower-income and lower-skilled renter households who struggled financially. The bottom end of the market (homes priced less than $200,000) dragged on overall activity, plunging double-digits in percentage terms amid a severe lack of supply and rising construction costs. Nevertheless, overall sales outpaced the national growth rate (7.1 percent) for the fourth straight year.

At the metropolitan level, San Antonio led with growth of 11.5 percent. Despite year-end declines in activity, Dallas and Austin sales still increased 9.8 and 8.4 percent annually, respectively, after home-price appreciation slowed in 2019. Transactions in Fort Worth accelerated 6.3 percent after modest improvement the previous year, while Houston’s metric climbed 9.2 percent. 

In the new-home market, each major MSA posted double-digit sales growth per Zonda, boosting overall activity. Similar to total sales, San Antonio recorded the greatest annual percentage increase of 17.7 percent, selling 15,000 new homes in 2020. Notably, sales for homes priced less than $200,000 ticked up for the second straight year after the same price cohort accounted for a quarter of the metro’s single-family starts in 2019. Austin’s metric reached 21,000 for the first time, largely due to elevated sales for homes priced $300,000 and $400,000, while DFW registered 40,800 new-home sales. Both locales registered accelerated activity during the second half of the year. Despite a low oil-price environment, new-home sales in Houston surged 12.8 percent to 34,500 compared with three consecutive annual declines between 2015-17.

According to the U.S. Census Bureau’s Current Population Survey/Housing Vacancy Survey, Texas homeownership normalized during fourth quarter 2020 to average 66.5 percent over the year compared with the national rate of 66.6 percent. Homeownership increased annually at the metropolitan level as well despite fourth-quarter declines. The rate in Austin and Houston shot up to 65.4 and 65.2 percent, respectively. DFW’s metric climbed to an all-time high of 64.7 percent (series starting in 2005), while 64.2 percent of San Antonio’s total housing units were owner-occupied. The overall rise in homeownership was largely due to elevated home purchases by millennials spurred by historically low mortgage interest rates. Young adults who moved back home with their parents during the pandemic due to job losses or remote schooling, which decreased the number of households, may have contributed to the elevated rate.

Amid record-breaking sales activity, Texas’ average days on market (DOM) slid to 55 days, corroborating robust housing demand. Austin and Dallas both shed a week off their DOMs, sinking to 45 and 46 days, respectively. The average home sold even faster in Fort Worth after just 42 days on the market. Demand was slightly softer in San Antonio than the rest of the state, but the metric still fell to 57 days. Meanwhile, the Houston DOM ticked down to 54 days.

Economic uncertainty surrounding the COVID-19 pandemic prompted investors to purchase safe-haven assets at an accelerated rate during the first half of the year, pulling interest rates to historically low levels. Expansionary monetary measures by the Federal Reserve and development on the vaccine front generated higher growth expectations, pushing interest rates up in the fourth quarter, but the ten-year U.S. Treasury bond yield still fell 125 basis points in 2020, averaging a record-low 0.9 percent. Meanwhile, the Federal Home Loan Mortgage Corporation’s 30-year fixed-rate sank to 3.1 percent. Mortgage rates slid to decades-low levels within Texas, falling from 4.2 to 3.2 percent for conventional, or non-GSE, loans. For GSE borrowers, the median mortgage rate was slightly higher during 2020 at 3.3 percent but still a significant decline from 4.4 percent the previous year. Texans capitalized on lower rates, pushing mortgage applications for home purchases up 24 percent compared with 2019. Refinance mortgage applications, which are more sensitive to interest rate fluctuations, more than doubled during the same time period after tripling during 2019. The growth rate of refinances is expected to decelerate in 2021 as the pool of households able to refinance shrinks. (For more information, see Finding a Representative Interest Rate for the Typical Texas Mortgagee.)

Corroborating tightening lending standards during the economic downturn, the debt-to-income ratio (DTI) constituting the “typical” Texas non-GSE mortgage decreased from 37.6 to 36.3 in 2020. The median credit score increased from 738 to a multidecade high of 746 as average consumer credit scores rose due to relief actions taken by the federal government and lenders that helped some households pay off debt and save money. The median loan-to-value ratio (LTV) flattened at 86.7 for non-GSE loans, while the GSE metric sank from 86.2 to 85.9. The DTI for GSE borrowers also ticked down, falling from 37.2 to 35.8. Despite a projected rise in delinquencies in the new year, lending standards are predicted to ease somewhat in 2021 due to expectations of overall better loan performance.

Prices

Robust demand and dwindling inventory pushed home-price growth to its highest level since 2013 when prices were still recovering from the Great Recession. The Texas median home price skyrocketed 7.9 percent annually to $259,000 relative to a 3.2 percent pace in 2019. The $19,000 increase is partially due to a distributional shift in sales activity away from the lower-end of the price spectrum to higher-priced homes. Central Texas led the major metros in median price growth with the metric rising 9.2 and 8.4 percent to $344,000 and $249,400 in Austin and San Antonio, respectively. The Dallas metric rose to $311,000 while the median price in both Fort Worth and Houston jumped to $260,000.

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. Home-price appreciation accelerated 5.2 percent annually during 2020 amid strong demand during the second half of the year. In Austin, the index soared at its fastest clip since 2014 at 8.3 percent. The North Texas metric increased 5.1 and 4.3 percent in Fort Worth and Dallas, respectively, while San Antonio landed in the middle, posting 4.9 percent growth. Houston’s index rose at a more moderate rate of 3.9 percent.

Elevated home prices offset historically low mortgage rates, capping affordability gains during 4Q2020 after strong improvement in 2019. Houston was the most affordable major MSA with an index of 1.9, indicating that a family earning the median income could afford a home costing 90 percent more than the median sales price. The metro also posted the largest percentage increase relative to year-ago levels, followed by Fort Worth, where the metric jumped to 1.8. The index flattened at 1.7 in both Austin and San Antonio, as well as in Dallas. Housing affordability is important to Texas’ demographic advantages that have supported the state’s economic prosperity over the past decade.

Single-Family Forecast

The Center projected single-family housing sales using monthly pending listings from the preceding period (Table 1). Only one month in advance was projected due to the uncertainty surrounding the COVID-19 pandemic and the availability of reliable and timely data. Texas sales are expected to decline 2 percent from December 2020. At the metropolitan level, transactions are predicted to flatten in Dallas and San Antonio but may increase 1.7 and 1.6 percent in Austin and Houston, respectively. On the bright side, activity relative to January 2020 was largely positive across the state and in each of the major MSAs, corroborating strong demand and an overall healthy housing market to start the new year.

Household Pulse Survey

According to the U.S. Census Bureau’s Household Pulse Survey, 8 percent of Texas homeowners were behind on their mortgage payments during December, greater than the national share of 7 percent (Table 2). Both geographies, however, registered a decrease in the proportion of households delinquent on their mortgage payments from the previous month; this was also true of DFW and Houston, where 6 and 12 percent of households were not caught up on their mortgages, respectively. Twenty-two percent of the Texas respondents who were not current expected foreclosure to be either very likely or somewhat likely in the next two months compared with 18 percent nationwide (Table 3). Those delinquent in North Texas and Houston were overall less at risk of foreclosure than the state average. Since the survey was taken, the Federal Housing Finance Agency extended the foreclosure and REO eviction moratoriums for properties owned by Fannie Mae and Freddie Mac (the Enterprises) until March 31, 2021. Similarly, the Centers for Disease Control and Prevention’s federal eviction moratorium has also been renewed through the end of March. Continued stability in the housing market is essential to Texas’ economic recovery.

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* All measurements are calculated annually, unless stated otherwise. 

Source – James P. Gaines, Luis B. Torres, Wesley Miller, Paige Silva, and Griffin Carter (February 23, 2021)

https://www.recenter.tamu.edu/articles/technical-report/Texas-Housing-Insight