|Texas Quarterly Apartment Report||Texas Quarterly Apartment Report||James P. Gaines, Luis B. Torres, Harold D. Hunt, Clare Losey, and Trenton Forbes||2019-11-04T06:00:00Z||research-article||Residential|
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The Texas economy remained strong in the midst of the longest U.S. expansion. Payroll employment grew at a steady pace, and unemployment remained historically low. Headline wage growth rate levels were sluggish despite labor-market tightness and decreased inflationary pressure. Low interest rates and job growth supported commercial investments and pushed housing sales to a record high. Total commodity exports stalled in the first quarter and could continue to struggle amid the ongoing U.S.-China trade spat. Political tension, trade uncertainty, and a slowdown in the global economy present the greatest challenges to extending the current expansion. For additional commentary and statistics, see Outlook for the Texas Economy.
The Texas Residential Construction Cycle (Coincident) Index, which measures current units under construction, followed the downward trend of the Texas Residential Construction Cycle (Leading) Index. A slowdown in construction permits hindered the Residential Construction (Leading) Index, pointing to slower residential construction going forward. Only the DFW leading index pointed toward a construction slowdown while the Austin, Houston, and San Antonio indices pointed toward higher activity. Overall market trends for the majority of Texas areas (metropolitan and micro) show positive occupancy rate growth combined with positive rent growth. Only Bryan-College Station and Lufkin registered negative rent growth. With the supply of single-family starter homes being constrained, young adults continue to rent units in the apartment sector.
The outlook for the rest of 2019 appears to be positive for the major Texas MSAs due to the strength of the U.S. and Texas economies. Interest rates should continue to remain low as inflation pressure remains subdued combined with low future growth expectations. On the negative side, a declining trade environment and a slowing world economy are the greatest headwinds to the Texas economy, challenging some of the state's most productive industries like oil and manufacturing. The U.S. economy is already showing signs of a slowdown in 2019 and a return to its expected growth potential of around 2 percent.
Austin's overall economic activity improved in 2Q2019 from the first quarter as job growth continued its upward trend, and the unemployment rate continued to fall. Employment continued to climb in Dallas-Fort Worth (DFW) with both the goods and services sector registering strong job growth. In Houston, the overall outlook remains positive, supported by a strong U.S. economy, although at a slower pace than during the oil boom. San Antonio's job growth continued strong in 2Q2019.
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