COLLEGE STATION – Texas' existing-home sales increased 2.5 percent month over month (MOM) to 29,000 transactions in May but remained more than 2,000 sales below peak levels reached at the start of the year.
The average home stayed on the market for just one month, a record-low duration since the series started in 1997.
"Mortgage rates are still hovering around 3 percent, and ongoing demographic trends continue to support housing demand," said Dr. Luis Torres, research economist for the Texas Real Estate Research Center at Texas A&M University.
According to the National Association of Realtors (NAR), national existing-home sales fell for the fourth straight month in April. Despite the 1.2 percent MOM decline, activity exceeded pre-pandemic levels and increased 46.2 percent from the pandemic's trough last May.
"Due to the fact that much of the pandemic's worst impacts registered in April and May 2020, standard year-over-year (YOY) calculations should be taken with a grain of salt," cautioned Torres. "For example, Texas resale transactions skyrocketed more than 50 percent YOY in May but rose 14.7 percent relative to May 2019 levels."
Compared with two years ago, existing-home sales elevated just 8.1 percent nationally.
Along with a monthly pickup in sales, a 3.1 percent decrease in new listings during May pulled Texas' months of inventory to 1.1 months in the state's existing-home market.
"The extremely low level of supply available is holding back sales," said Torres. "The limited inventory for homes priced less than $300,000 is particularly distressing and is stressing home affordability."
Texas' median existing home sales price accelerated 27.8 percent YOY to $289,900. NAR reported an annual increase of 21.5 percent to $306,000 in the national metric.
Torres, however, said that a shift in the composition of sales toward higher-priced homes due to limited inventory at the bottom price cohorts explains some of the increase in the median sales price.
"Our Texas Repeat Sales Home Price Index accounts for this compositional bias and indicates annual home-price appreciation was closer to 15 percent in May. Although less extreme than the median price metric suggests, the rise in real home prices is still impairing housing affordability within Texas."
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Source: Texas Real Estate Research Center