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COLLEGE STATION, Tex. (Real Estate Cente​r) – Texas' housing market is low on fuel. Buyers keep pushing the accelerator, but the housing economy is running on fumes. Researchers at the Real Estate Center at Texas A&M University say “market imbalances" are to blame, specifically the lack of homes priced less than $200,000.

“Supply hasn't kept up with demand," says Center Research Economist Dr. Luis Torres. “In April, the months of inventory for Texas homes inched upward, but sluggish residential housing construction could impede progress. If the housing shortage continues, expect prices to go higher as more Texans find housing unaffordable."

A Texas home is on the market an average of 55 days, the lowest recorded since the Center began keeping records in 2011. Homes priced $200,000 to $299,999 sell fastest – an average of 51 days.

Statewide, demand for existing homes is getting stronger. The average existing home is on the market just 50 days. In Fort Worth, it is 30 days; in Dallas, 31 days. Existing homes in Austin and Houston average about 45 days on the market. San Antonio is the only major Texas market where demand for an existing home has waned, up to 50 days after a five-month decline.

“Tight inventories dragged total Texas housing sales down 5.9 percent in April," said Torres. Sales fell 9.6 percent for homes priced less than $200,000, the price range that accounted for nearly 60 percent of the total sales decline."

Housing affordability stress is widespread, according to the latest Texas Housing Insight report from the Real Estate Center. A combination of lagging wages and house price appreciation has strained home affordability nationwide. Affordability problems are amplified in Texas, where wages remain less than the national average, and housing prices are increasing at a significantly faster rate than the United States.

“The Federal Housing Finance Agency (FHFA) Housing Price Index shows Texas homes are 43.1 percent more expensive than they were in 2007," says Torres. Nationally, prices are up only 7.4 percent."

Texas' major metros have recorded even greater price increases over the last decade. Prices are up 65.7 percent in Austin, 55.4 percent in Dallas, 44.1 percent in Fort Worth, and 55.7 percent in Houston. San Antonio posted a more modest 37.6 percent appreciation.

After reaching a record high in March, the number of Texas monthly single-family housing construction permits fell 15.8 percent in April, although they remained 9.1 percent ahead of last year. Texas still leads the nation in total permits issued.

Texas housing starts also corrected significantly, falling 10.8 percent after its strongest first quarter in more than a decade. However, starts remained 8.8 percent higher than last year.

In the U.S., the months of inventory fell to less than 4.2 months for the first time since 2005. Around six months inventory is considered balanced. Texas' inventory rose to 3.8 months, the second consecutive monthly increase. Most of this expansion, however, was for homes priced at more than $400,000.

The Texas housing supply increased in every price range except for homes less than $200,000, which fell to 3.0 months.

The latest issue of Texas Housing Insight by Chief Economist James Gaines, Torres, and Research Assistant Wesley Miller is available online.​​

​​​​​COLLEGE STATION, Tex. (Real Estate Center​)  — Economies of four Texas metropolitan areas along the Mexico border are shaped by many factors, both from within the state and from across the Rio Grande. A new report from the Real Estate Center at Texas A&M University is monitoring factors influencing economies in Brownsville, El Paso, Laredo, and McAllen.

The inaugural edition of Texas Border Economy notes that economic activity along the Texas-Mexico border slowed late last year, particularly in McAllen and Laredo. Poor economic performance continued into first quarter 2017 for Brownsville and Laredo, dragging down housing demand for both.

“In November, McAllen went through the sharpest contraction," said Research Economist Dr. Luis Torres, “but rallied recently behind strong employment figures. El Paso remains the most stable border economy, but stagnant wages persist there."

Economies in Texas border metros differ. Business cycle indexes for Brownsville and Laredo continue to slide while they are trending upward in McAllen. Although El Paso's index slowed, it maintained its two-and-a-half-year positive trend.

An expanding labor force has pushed El Paso's unemployment rate to 5.4 percent – the metro's highest since 2015. The unemployment rate remained unchanged in McAllen (8.6 percent), Brownsville (8.0 percent), and Laredo (5.0 percent).

“Employment growth in Brownsville and Laredo abruptly decelerated in the first three months of 2017," said Torres. “In Brownsville, employment growth fell from 2.0 to 0.2 percent. Laredo dropped from 3.8 to 0.8 percent. “

Depressed wages continue to plague Brownsville and Laredo. Since 2012, earnings have dropped 26.6 percent in Brownsville. In the last year, Laredo earnings have fallen 8.8 percent.

“Wage decline has not hit McAllen," said Torres. “Hourly earnings in McAllen are up 8.4 percent year-over-year and up 29.5 percent since July 2015. El Paso continues to post stagnant wages, which are still below pre-recession levels."

The peso-per-dollar exchange rate is an important determinant of border economic performance. In March, the rate was down 2.7 percent to 18.77 pesos per dollar.

“Peso-per-dollar depreciation hinders border economies because it reduces consumption by Mexican nationals, particularly in the retail sector," said Torres. “The Laredo and Brownsville economies rely heavily on cross-border business transactions and, therefore, are disproportionately affected by currency fluctuations."

Torres adds that a weaker peso does benefit some sectors of the economy, such as those importing large quantities of goods from Mexico. In March, total value of trade activity expanded across the border. Laredo's trade activity was more than double the total amounts of the other three border metros.

Housing along the border has been affected by underlying economic trends. Laredo's first-quarter home sales were down 6.5 percent. Brownsville avoided a quarterly sales decline thanks to a higher home inventory level.

Following a strong January, home sales in El Paso declined in February and March but still posted a modest quarterly increase of 1.2 percent, said Torres. McAllen's recent economic upswing increased quarterly home sales by 8.3 percent and year-over-year sales by 14.2 percent.

“A glut of new houses in McAllen fueled the sales surge," said Torres, “as the months of inventory (MOI) for new homes remains longer than 12 months and continues climbing. The opposite occurred in Laredo, where the lack of new homes contributed to a sales contraction and an MOI of less than four months. Brownsville and El Paso posted more typical border inventory levels for new homes at 6.7 and 7.1 months, respectively."

Laredo's constricted housing inventory may expand in the near future, notes the Real Estate Center report. Single-family residential construction permits have increased in 11 of the last 12 months.

“Whether all these new permits materialize into actual new home construction depends on Laredo's overall economic condition, which is poor currently," said Torres.

The number of monthly housing permits is down substantially in McAllen. In first quarter 2017, El Paso's housing permits jumped 47.7 percent as demand increased.

Changes in existing home inventories have been more moderate in border metros. The existing home MOI in Brownsville and McAllen remains at 8.6 and 9.0 months, respectively. Existing inventories expanded in Laredo where the MOI rose to 5.9 months, the highest since last May. Higher demand in El Paso precipitated the MOI for existing homes falling to 5.1 months.

Texas Border Economy is free online.​

COLLEGE STATION, Tex. (Real Estate Center) – Home construction is ramping up across America, and in no place is that more apparent than in Texas. 

“After an anemic start to the year, the number of Texas single-family home construction permits soared 11.5 percent in March to a ten-year high of 10,481," said Dr. Luis Torres, a research economist with the Real Estate Center at Texas A&M University. 

"Texas led the nation in total permits issued and ranked fifth in permits per capita," he said. “Construction permits increased significantly in the Texas Urban Triangle. 

Houston and Dallas were the national permits-issued leaders. Houston (No. 1) issued 3,543 and Dallas (No. 2) 2,405. Fort Worth recorded 863 new permits for the month, a 45.4 percent increase since January. 

The permit boom is highlighted in the Center's latest issue of Texas Housing Insight​. Torres, Center Chief Economist Dr. Jim Gaines, and Research Assistant Wesley Miller author the monthly update. 

“After lagging in February, permits in Austin and San Antonio surged as well," said Torres. “The 1,547 permits issued in Austin were the most in a decade. San Antonio's 705 new home permits was a 27.2 percent increase." 

Texas housing starts, which generally lag construction permits, were up 26.7 percent quarter-over-quarter, the strongest showing in more than a decade. Quarterly starts were up 4.6 percent in Dallas, 5.3 percent in Houston, and 5.8 percent in San Antonio. 

“Housing starts fell in Austin," said Torres, “but should gain momentum from positive permit numbers."Despite all the good housing news, there is not much relief in sight for Texans seeking homes priced at $200,000 or less, the most constricted price range. 

“Lower-priced housing is in short supply," said Torres. “Texas has only a 3.1-month supply of homes for sale in that price range, and around six months is considered balanced. Increasing land and labor prices have forced homebuilders to concentrate on the higher-end market." 

As demand for Texas housing goes up, the time the average home is on the market goes down.“The average time a Texas home is on the market has held steady at 57 days for the last three months," said Torres. “Homes in the $200,000 to $300,000 price range are driving this demand as shown by their even shorter time-on-market of 52 days." 

Texas' total housing sales rose 3.3 percent during March after a weak showing in the previous month. March sales rose in every price range and in every major Texas metro, according to the Real Estate Center report, which is available online. 

Funded primarily by Texas real estate licensee fees, the Real Estate Center was created by the state legislature in 1971 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.​​