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COLLEGE STATION, Tex. (Real Estate Center) –  Texas' housing market slowed in August after a surge of pent-up demand inflated sales numbers the previous month.

“Sales activity is no longer catching up from the economic shutdown that hindered the showing of homes and closings at the beginning of the spring buying season," said Dr. James Gaines, chief economist for the Real Estate Center at Texas A&M University.

“Existing homes sold through Texas Multiple Listing Services peaked in July as the economic consequences of the ongoing pandemic continued to develop."

Existing-home sales fell 14.6 percent from July but remained 3.4 percent higher than in August 2019.

“Low mortgage rates supported the year-over-year increase, but the effect of that stimulus may dwindle if persistent unemployment shrinks the number of qualified homebuyers," Gaines said.

According to the National Association of Realtors, existing-home sales at the national level increased for the third consecutive month on a seasonally adjusted basis and maintained double-digit year-over-year growth. They attribute the gains to robust demand but note rising supply-side constraints.

Center Research Economist Dr. Luis Torres highlighted the supply-demand imbalances that will challenge the housing market over the next year.

“While sales surged during the summer, the number of new listings hitting the market has not matched that recovery, worsening the state's housing shortages, particularly for homes priced less than $300,000," said Torres. “This mismatch has pulled the months of inventory to record lows of fewer than 2.5 months."

Diverging trends between the upper and lower price ranges have led to large increases in the median sale price for existing homes, which increased by more than 10 percent year over year for the second consecutive month, according to Center research.

“The initial economic shock from COVID-19 was concentrated in the service sector and other industries that rely on a younger workforce," according to Torres. “These households are more likely in the market for lower-priced homes, and we've seen that market suffer disproportionately. The relative strength in upper price ranges is inflating the median sale price. The Center's Texas Repeat Sales Index, however, accounts for this bias and revealed more moderate growth at 5 percent."

Read more about the Real Estate Center's research staff thoughts on the economic impact of COVID-19.

Funded primarily by Texas real estate licensee fees, the Real Estate Center was created by the state legislature to meet the needs of many audiences, including the real estate industry, instructors, researchers, and the public. The Center is part of Mays Business School at Texas A&M University.​​​

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COLLEGE STATION, Tex. (Real Estate Center) – August was a successful month for Texas' manufactured housing industry with substantial increases in production and sales, according to the latest Texas Manufactured Housing Survey. Labor constraints relaxed as the rate of contracted COVID-19 cases flattened after spiking in July. Supply disruptions, however, continued to contribute to increased backlogs.

“Through July, Texas manufactured housing-plant production was down 9 percent from pre-pandemic levels," said Rob Ripperda, vice president of operations for the Texas Manufactured Housing Association (TMHA), “but factories continue to see increased orders and are staffing up to get those run rates back to where they were."

The backlog has translated to higher sale prices, but rising input costs counteracted the impact on profit margins. Lumber and steel account for the largest input share for manufactured housing. Price pressures are expected to ease in coming months as production catches up to demand.

There still exists a heightened level of uncertainty surrounding the industry as manufacturers juggle constant changes in public-health protocol and the regulatory environment. These concerns, however, did not curb respondents' optimism regarding business activity and the overall outlook in the second half of 2020.

The Real Estate Center at Texas A&M University and the TMHA have partnered to produce a monthly survey of business conditions and expectations surrounding the manufactured housing industry.

Funded primarily by Texas real estate licensee fees, the Real Estate Center was created by the state legislature to meet the needs of many audiences, including the real estate industry, instructors, researchers, and the public. The Center is part of Mays Business School at Texas A&M University. ​​​

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New home sales are “exploding," says a Texas housing expert, and homebuilders can't keep up with the demand. This means home prices will continue to go up as existing supply shrinks.

“Now is a good time to buy a home," says Dr. Jim Gaines, chief economist for the Real Estate Center at Texas A&M University. “There are many other reasons why that's so.

“Interest rates are low, mortgage lenders are generally approving loans easily, and future prices will be higher. Market demand is now focused on the middle- to higher- income groups who have remained employed during the pandemic. This means higher-priced homes have been more active than lower-priced homes sought by workers more impacted by COVID-19."

The supply of available properties is the primary restraint on today's housing market, said Gaines. Aging in place, the high number of refinancings at low interest rates, and lingering fear about COVID make sellers less aggressive.

“The homebuying process can be done completely online without face-to-face communications, he said. “Most people would probably prefer not to do business remotely, especially older millennials, but the younger age group is much more receptive. Service providers are accommodating the changes in processes and technology."

The Real Estate Center housing expert isn't worried about interest rates either.

“It's not likely the Federal Reserve will increase interest rates anytime soon," said Gaines. “They are on record as saying they will allow inflation to go to 3 percent or more and stay there for a while to get the overall economy moving."

Millennials are a big factor in the current housing market, said the Center's chief economist.

“Millennials are not sitting out the housing market," said Gaines. “The Real Estate Center just reported record homeownership rates for second quarter 2020.

“There's a bifurcated market, especially among the millennials. The better-educated group with jobs that continue during the pandemic are active and now acquiring homes. The other part of the millennials, including the very youngest segment of the cohort, may have had jobs more susceptible to closing and simply are going to have to get through the recovery process before becoming homeowners."

When evaluating the healthiest housing markets, Gaines said buyers should consider the types, distribution, and continuity of jobs; income distribution; and local land costs.

A new study by WalletHub compares 300 cities of varying sizes for 24 key indicators of housing-market attractiveness and economic strength. Three Texas cities made the top ten best real estate markets. Frisco is No. 3, Austin No. 7, and Denton No. 9. ​

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COLLEGE STATION, Tex. (Real Estate Center) –  Texas' housing market continued its summer surge in July after coming to screeching halt in April and May due to the economic shutdown and social distancing measures.

“Pent-up demand from the spring fueled housing activity across the state," said Dr. James Gaines, chief economist for the Real Estate Center at Texas A&M University. “After a strong June, existing homes sold through Texas Multiple Listing Services in July broke record highs with nearly 35,000 closed listings.

Existing-home sales increased 13.5 percent relative to July 2019 but remained below year-to-date levels (comparing January through July in 2020 and 2019).

“Low mortgage rates and residual demand from April and May bolstered sales activity, but the resurgence of new coronavirus cases during the summer may temper growth in coming months," said Gaines.

According to the National Association of Realtors (NAR), existing-home sales across the country soared 24.7 percent month over month and 8.7 percent relative to July 2019, mirroring Texas' two-month rebound.

“The federal government's initial bolstering of unemployment insurance and the foreclosure moratorium kept the economy afloat during one of the greatest shocks in our lifetime," said Center Research Economist Dr. Luis Torres. “Moreover, the Federal Reserve's monetary policy actions have pushed down interest and mortgage rates. The situation, however, is still developing from both a public health and economic perspective, and many challenges still lie ahead."

One of those challenges is the ongoing shortage of single-family housing, particularly for homes priced less than $300,000. The months of inventory for all existing homes reached a record low of 2.5 months, a full month less than year-ago levels. While the number of new listings on the market increased, it failed to keep pace with sales activity.

The housing shortage contributed to higher sale prices. The median price for an existing home sold in Texas surpassed $260,000 for the first time in series history, jumping 11 percent year over year. That double-digit increase, however, may be deceptive.

“Most of this price appreciation is attributed to the relative strength in the upper price cohorts," said Torres. “The Texas Repeat Sales Index accounts for this bias and revealed more moderate growth at 4 percent."

The national median existing-home price surpassed $300,000 for the first time after an 8.5 percent year-over-year increase but may suffer from a similar upward bias due to compositional changes.

​​Read more about the Real Estate Center's research staff thoughts on the economic impact of COVID-19.

Funded primarily by Texas real estate licensee fees, the Real Estate Center was created by the state legislature to meet the needs of many audiences, including the real estate industry, instructors, researchers, and the public. The Center is part of Mays Business School at Texas A&M University.

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COLLEGE STATION, Tex. (Real Estate Center) – More Texas households own a home than ever.

According to the latest Texas Housing Insight report from the Real Estate Center at Texas A&M University, the state's homeownership rate hit a record 67.5 percent in June.

"Despite falling sales in April and May, Texas' second quarter homeownership rate was the highest since record-keeping began in 1996. Texas now lags the national rate by only half a percent, the smallest in eight years," said Center Chief Economist Dr. James Gaines.

"National homeownership rates were higher across all races, including minorities," he said. "Among Texas metros, Austin had the greatest increase in homeownership, rising almost 6 percentage points to 65.3 percent."

The report has more good news.

"The Center's single-family housing sales projection suggests July numbers may show a complete recovery in single-family home sales," said Gaines. "But continued improvement depends on the resurgence in contracted coronavirus cases and hospitalizations."

Total June housing starts rebounded 27.9 percent, but a downward trend continues. Fewer than 26,000 single-family homes broke ground in the Urban Triangle (bounded by DFW-San Antonio-Houston) during the second quarter, a 4.3 percent decline.

Texas homes are selling at a record pace. A dwindling supply of active listings and a resurgence in home sales pulled Texas' months of inventory down to an all-time low of 2.8 months. Inventories of homes for sale posted record lows of 1.6 and 2.6 months in Austin and San Antonio, respectively. Six months is considered a balanced market.

Approximately two months after the forced economic shutdown, Texas' homes were on the market an average 64 days in June, slightly more than the previous month. Major metros recorded softer demand. Houston and San Antonio's metrics exceeded the state average, rising above 64 and 65 days, respectively. The average home in North Texas sold after 59 days in Dallas and 51 days in Fort Worth. Austin was the exception, as the days-on-market decreased to 53 days compared with 57 days for June last year.

"Pent-up demand and record-low mortgage rates pushed total housing sales up 29.4 percent in June," said Gaines. "Improvement, however, stemmed from a pickup in existing-home sales transactions as activity in the new-home market stalled after a year of solid growth."

The state's median home price jumped 3.9 percent to $249,100 in June after subdued growth to start the second quarter. Annual price appreciation accelerated 4.2 percent. Austin's median price led the state at $324,700. The median price was $298,800 in Dallas and more than $250,000 in Fort Worth and Houston. San Antonio's median home price increased to $240,800.

"Slower home-price growth and historically low interest rates increased housing affordability in Texas' major metros during the second quarter," said Gaines. "Houston and Fort Worth were the most affordable, with both indexes climbing to 1.8. That means a Texas family earning the median income could afford a home 80 percent more than the median sale price."

Housing affordability in Austin and Dallas registered double-digit year-over-year gains, exceeding 1.7 and 1.6, respectively, with the former posting a five-year high. Meanwhile, San Antonio's index rose steadily to 1.7.

"We expect July numbers will show a complete Texas rebound from the pandemic-induced shutdown," said Gaines. "Texas single-family sales are estimated to increase 22 percent, while Houston should outshine the other metros with 25.2 percent growth.

"In Austin and Dallas, single-family sales are projected to bounce back 24.6 and 22.6 percent, respectively. San Antonio's improvement is forecasted to be slightly lower than the state's at 17.8 percent but still sizeable nonetheless."

Texas Housing Insight is available for free download on the Real Estate Center's website.