Source – James P. Gaines, Luis B. Torres, Wesley Miller, Paige Silva, and Griffin Carter (September 24, 2021)
https://www.recenter.tamu.edu/articles/technical-report/Texas-Housing-Insight
August 2021 DFW Area Real Estate Stats
August 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.
August 2021 is a wrap and the stats are out! In reviewing the five counties of Collin, Dallas, Denton, Rockwall and Tarrant, new listings were down an average of 4.48% compared to 2020, while active listings were down almost 33%. The days on market averaged out to 16, proving once again that the lack of inventory is still a factor in North Texas. What is up are the average sales prices and thus the price per square foot with the highest gain in Dallas county, up 58.2% from last year. The numbers don’t lie, we are still enjoying a strong seller’s market in the DFW Metroplex! Happy Selling!
For more stats information, pdfs and graphics of our stats including detailed information by MLS area and condo stats, visit the Resources section on our website at DFW Area Real Estate Statistics | Republic Title of Texas
For the full report from the Texas A&M Real Estate Research Center, click here. For NTREIS County reports click here.
Texas Housing Insight – June 2021 Summary
Total Texas housing sales fell 2.0 percent during the second quarter as inventories remained relatively low in June. Most of the quarterly decline can be attributed to the lack of existing homes priced less than $400,000, offsetting elevated luxury-home sales in the resale market and overall growth in new-home sales. Texas’ homeownership rate decreased amid reduced housing affordability. Overall, housing demand remained healthy but was hindered by depleted inventories, pushing median home-price growth into double-digit territory for the year. Supply-side indicators surged in response to the unprecedented low level of inventory and remained positive compared with year-ago levels.
Supply1
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 June. Construction activity is expected to remain strong in coming months as indicated by the Texas Residential Construction Leading Index (RCLI), which rose to a record high amid elevated weighted building permits and housing starts as well as a decrease in the ten-year real Treasury bill yield. Although the RCLI indicated strong future activity, the trend flattened as growth rates in building permits and housing starts decelerated. Austin’s leading index reflected statewide fluctuations and similarly reached an all-time high. Houston and San Antonio’s indexes increased, despite issuing fewer building permits. The indexes in the North Texas metros flattened as weighted building permits and residential starts decreased.
According to Zonda, supply-side activity surged at the earliest stage of the construction cycle with a 21.0 percent quarterly increase in the number of new vacant developed lots (VDLs). Austin accounted for most of the gains as VDLs intended for homes selling for more than $400,000 doubled. Development also soared in San Antonio as activity heated up for lots targeted for homes priced between $300,000 and $399,000. New VDLs picked up for the second straight quarter in Dallas-Fort Worth (DFW) despite reduced investment in homes priced more than $500,000. Conversely, Houston’s lot development remained flat mainly due to depressed activity at the bottom of the price spectrum.
Quarterly fluctuations in single-family construction permits reflected movements in VDLs, although the metric receded 6.1 percent on a monthly basis, flattening the trend after a year-long rise. Houston and DFW topped the national list at the metropolitan level and accounted for most of the state’s improvement, issuing 4,789 and 4,627 non-seasonally adjusted permits, respectively. In Central Texas, permits staggered in June but trended upward after strong quarterly growth. Austin issued 2,346 single-family permits, while San Antonio issued 1,270. Meanwhile, Texas’ multifamily sector registered a surge in issuance as investment shifted from duplexes, triplexes, and four-unit structures to five-or-more units. The multifamily metric remained up 13.5 percent year to date (YTD) relative to the same period last year.
Even as lumber price remained at historically elevated levels, total Texas housing starts increased after stalling during the first quarter. Zonda data revealed roughly 36,800 homes broke ground in the Texas Triangle in 2Q2021, pushing single-family housing starts up 7.2 percent on a quarterly basis amid strengthening economic conditions and robust housing demand. Housing starts in North Texas reached an all-time high, increasing 14.5 percent from last quarter. Activity increased in Houston and San Antonio for homes priced more than $300,000 but slowed in Austin for similarly priced homes.
Single-family private construction values fell from last month’s record high as the metric trended downward in all of Texas’ major metros except San Antonio. Values there normalized quarter over quarter (QOQ). Austin’s single-family construction contracted 1.6 percent. Despite the downward trend, activity in Houston and DFW expanded 6.6 and 2.5 percent QOQ, respectively.
The number of homes added to Texas Multiple Listing Services ticked up in June after falling to historical lows. Sales, however, declined as home prices continued to climb, nudging Texas’ months of inventory (MOI) up to just 1.3 months. A total MOI around six months is considered a balanced housing market. Inventory for homes priced less than $300,000 remained hyper-constrained, dropping to 0.9 months. Meanwhile, the MOI for homes priced between $400,000 and $499,999, the price range at which inventory was at its most expansive, expanded to 2.1 months.
Supply in the major metros was even more constrained, although inventories expanded slightly. Austin’s MOI rose to half a month, while the metric in North Texas and San Antonio flattened to 1.0 and 1.2 months, respectively. Although Houston’s overall MOI was greater than the state average at 1.4 months, inventory for homes priced less than $300,000 slipped below 0.8 months. Depleted inventory is a major headwind to the continued health of Texas’ housing market.
Demand
Sales slowed in June amid ongoing inventory constraints, marking the fifth consecutive quarterly decline as total housing sales fell 2.0 percent QOQ. Activity for homes priced less than $400,000 offset quarterly growth of 11.5 percent in the luxury-home sector. Although the overall decrease occurred in all major metros, only San Antonio and Dallas posted quarterly contractions below the state average.
In contrast to decreased quarterly sales in the existing-home market, Zonda data revealed positive sales growth in three of the major metros’ new-home sectors. New-home sales in Austin, however, tumbled 14.9 percent to 4,936 sales, marking the second consecutive quarterly decline despite accelerated activity for homes priced more than $400,000. New-home sales in North Texas and Houston grew 5.2 and 3.9 percent QOQ, respectively, even as transactions diminished for homes priced less than $300,000. San Antonio’s metric climbed 2.2 percent QOQ.
Amid recovering economic conditions and overall robust sales activity, Texas’ homeownership rate declined to 63.6 percent, 1.8 percentage points below the U.S. rate, per the U.S. Census Bureau’s Current Population Survey/Housing Vacancy Survey. Nationally, homeownership improved for white households but decreased for minority households and householders between the ages of 35 and 44 years. Metro-level homeownership rates exceeded the national average only in Austin and Houston, where they improved to 65.4 and 66.0 percent, respectively. The metric fell in North Texas and San Antonio to 61.5 and 57.2 percent, respectively. Homeownership rates may continue depressed in the coming months as COVID-19 foreclosure-protection policies expire.
Texas’ average days on market (DOM) continued to trend downward, reaching a record low of 30 days. The historically low DOM indicated robust housing demand as sales decreased because of limited supply. Austin’s DOM shed almost six weeks off its year-ago reading, plummeting to an average of 15 days, while homes in North Texas sold after an average of just 22 and 23 days in Fort Worth and Dallas, respectively. San Antonio and Houston’s metrics also registered steep declines but hovered closer to the statewide average, falling to 30 and 33 days, respectively. All of the major metros experienced record lows in their average DOM, corroborating strong housing demand.
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 decreased to 1.5 percent after hovering at pre-pandemic levels of 1.6 percent2 for three consecutive months, but the Federal Home Loan Mortgage Corporation’s 30-year fixed-rate ticked up to 2.98 percent. The median mortgage rate within Texas held steady in May3 at 3.2 and 3.0 percent for GSE and non-GSE loans, respectively, but, similar to the national headline metric, remained below year-ago levels. Texas home-purchase applications declined for the third consecutive month in June, falling 25.4 percent YTD, and refinance applications declined 31.8 percent over the same period. Lenders adding more requisites and the shrinking pool of households able to refinance are likely impacting refinance activity. (For more information, see Finding a Representative Interest Rate for the Typical Texas Mortgagee.)
In May, the median loan-to-value ratio (LTV) constituting the “typical” Texas conventional-loan mortgage dropped from 88.3 a year ago to 83.3. The debt-to-income ratio (DTI) declined from 37.2 to 34.9, while the median credit score jumped 17 points in the last year to 756. The LTV and DTI for GSE borrowers decreased from 87.3 and 36.0 last April to 84.9 and 35.2, 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 Texas median home price rose for the sixth consecutive month, accelerating 19.3 percent YOY to a record-breaking $298,013 in June. The ongoing compositional sales shift toward higher-priced homes contributed to a higher median price. The share of luxury-homes sold in Austin more than doubled to two-fifths compared with the same time last year, contributing to the 43.2 percent YOY surge in the median price ($465,900). The Dallas metric ($364,400) increased 22.0 percent, while annual price growth in Fort Worth ($305,100) shot up to 21.7 percent after 23.6 percent growth the previous month. Houston ($301,000) and San Antonio’s ($279,300) metrics elevated 19.4 and 15.7 percent, respectively.
The Texas Repeat Sales Home Price Index accounts for compositional price effects and corroborated substantial and unsustainable home-price appreciation as the index soared 13.3 percent YOY. The metric skyrocketed 36.0 percent in Austin, followed by North Texas with annual home-price appreciation at 16.7 and 15.3 percent in Dallas and Fort Worth, respectively. San Antonio posted a 12.9 percent annual hike, while Houston’s index registered double-digit growth for the first time since the series started in 2014, elevating 10.2 percent. Rapid price growth outpaced wage gains, adding additional pressure to housing affordability.
Single-Family Forecast
The Texas Real Estate Research Center updated its forecasts for 2021 and 2022 single-family housing sales (Table 1). Forecasts are subject to change due to the uncertainty surrounding the COVID-19 pandemic and the availability of reliable and timely data. Texas sales are expected to increase 5.5 percent in 2021. The housing market will continue to be characterized by strong demand with low inventories accompanied by strong price growth. Only sales in Houston and San Antonio are expected to exceed the state’s forecast, increasing 7.4 and 6.1 percent, respectively. Meanwhile, single-family sales in Austin and North Texas will likely normalize around 4.8 and 2.6 percent, respectively. Inventories of homes priced less than $300,000 will be especially low, affecting sales in that price range. Inventories should improve in the coming months as listings seem to have reached a trough and are rising, easing some of the price pressures.
Even with shortages of labor, appliances, lumber, and other construction materials driving up prices, new-home construction should register strong positive growth in 2021. The supply bottlenecks faced by homebuilders are anticipated to be resolved in the latter part of this year or next.
Economic growth and demographic trends, such as aging millennials and out-of-state migration, will help drive Texas housing demand in the remainder of 2021 and into 2022.
For 2022, expect the supply of homes for sale to increase and housing demand to remain relatively strong. This will help balance the market and slow home-price growth. Mortgage rates could be somewhat higher in 2022 than 2021 because of changes in the Fed’s monetary policy and because of inflationary pressures. If 2021’s high price growth is added to rising mortgage rates, demand should weaken in 2022. Affordability will continue to be an issue for buyers looking to purchase starter homes less than $300,000. In some regions, it will worsen as sharp increases in land, labor, and material costs make it difficult to build homes in that price range profitably.
Delinquencies and foreclosures will probably increase once forbearance ends in the fall of 2021. Both have been kept low due to government policies, but they are no longer seen as major issues facing the housing market because of the recovery in the labor market and government transfers benefiting households that in the past couldn’t make their mortgage payments on time. Also, given the lack of homes available for sale, the market could absorb an increased number of homes in delinquency or foreclosure. These homes could possibly be sold with a gain even before they enter into foreclosure. (For more information, see 2021 Mid-Year Texas Housing & Economic Outlook.)
Household Pulse Survey
According to the U.S. Census Bureau’s Household Pulse Survey, the share of Texas homeowners behind on their mortgage payments increased to 6 percent in June (Table 2). The metric within Texas’ largest metropolitan areas, however, decreased below the statewide average to 5 percent in Houston and DFW. 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 grew to 26 percent in June, higher than the national rate of 19 percent (Table 3). The proportion of delinquent individuals who were at risk of foreclosure declined in North Texas and Houston, falling to 19 and 13 percent, respectively. The Federal Housing Finance Agency’s foreclosure and REO eviction moratoria for properties owned by Fannie Mae and Freddie Mac (the Enterprises) was extended through September 30, 2021. The Centers for Disease Control and Prevention renewed its federal eviction moratorium through the third quarter (October 3, 2021). Continued stability in the housing market is essential to Texas’ economic recovery.
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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 non-seasonally adjusted. Loan-to-value ratios, debt-to-income ratios, and the credit score component are also non-seasonally adjusted.
3 The release of Texas mortgage rate data typically lags the Texas Housing Insight by one month.
Source – James P. Gaines, Luis B. Torres, Wesley Miller, Paige Silva, and Griffin Carter (August 26, 2021)
https://www.recenter.tamu.edu/articles/technical-report/Texas-Housing-Insight
July 2021 DFW Area Real Estate Stats
July 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.
New listings are staying on par with where they were in July 2020, in Collin, Dallas, and Denton counties, down just slightly. However, in Rockwall and Tarrant listings are up an average of about 10%. The average sales prices across all five counties have risen to an average of about 20% above last years’ listing prices. The numbers don’t lie, the summertime market in North Texas is still hot!
For more stats information, pdfs and graphics of our stats including detailed information by MLS area and condo stats, visit the Resources section on our website at https://www.republictitle.com/residential-resources/
For the full report from the Texas A&M Real Estate Research Center, click here. For NTREIS County reports click here.
June 2021 DFW Area Real Estate Stats
June 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.
New listings are almost exactly where they were in June 2020 and down an average of just 3% in all five counties. Interestingly, the number of sales are up in only Collin and Dallas counties and down an average of 8% in Denton, Rockwall and Tarrant counties. The average sales price has risen to an average of over 25% across all counties. As it’s been all summer long, it is a great time to be a seller in the North Texas real estate market, so now is the time to list if you’ve been on the fence.
For more stats information, pdfs and graphics of our stats including detailed information by MLS area and condo stats, visit the Resources section on our website at https://www.republictitle.com/residential-resources/
For the full report from the Texas A&M Real Estate Research Center, click here. For NTREIS County reports click here.
Texas Housing Insight – May 2021 Summary
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.
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* 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
Texas Housing Insight – April 2021 Summary
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 DFW Area Real Estate Stats
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.
April 2021 DFW Area Real Estate Stats
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.
Texas Housing Insight – March 2021 Summary
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.
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* 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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