RECON for July 31, 2020RECON for July 31, 20202020-07-31T05:00:00Z2020-07-31T05:00:00Z
RECON Real Estate Center
Manufactured home community
Consumer demand for Texas manufactured housing rose in July, but COVID-19-related disruptions hindered the industry’s ability to meet orders and created a backlog. Keep reading today's RECON for the details on this story and more. (Photo by Center Research Economist Dr. Harold Hunt.)
July 31, 2020

COVID-19 creates new headwinds for Texas’ new-home market

COLLEGE STATION (Real Estate Center) – COVID-19’s impact on the economy can be summed up in one word: disruption. Disruption in the single-family construction market in many ways mirrors that in the overall housing market, with shocks on both the supply and demand sides.

New single-family home sales through Multiple Listing Services (MLS) suffered in April and May, months when sales normally begin to ramp up. Similarly, MetroStudy data show new-home sales growth fell almost 100 basis points in one quarter but remained positive. The sudden drop in sales resulted in dire builder sentiment, according to the National Association of Home Builders Home Market Index.

Sales decreases vary considerably by construction stage. At the national level, the biggest pullback in new-home sales was for homes that hadn’t begun construction yet, according to U.S. Census Bureau data. New homes either currently under construction or recently completed also retreated but at a much smaller magnitude.

Disruption in the single-family construction market isn’t limited to sales, said Real Estate Center Senior Data Analyst Joshua Roberson.

"The supply side is showing signs of chaos as well," he said. "A precipitous drop in new-home listings through the MLS followed poor new-home sales. This squeezed statewide inventories to less than four months, the lowest level over the past ten years."

Texas Single-Family Permit Counts

Construction input costs also fell dramatically in April but gradually recovered in the following months, according to data from the Bureau of Labor Statistics (BLS). This shock is in large part due to similar turmoil in energy costs, specifically the oil industry, BLS data show. 

Nationally, construction labor also had a knee-jerk moment with a wave of layoffs in April, knocking total construction employment back to 2018 levels.

"There has been some recovery in this sector, but how much and for how long isn’t for certain right now," Roberson said.

Nationally, job openings and rehires had a strong comeback in May that nearly matched the total separations from April, according to the BLS. Texas construction employment made a recovery, but it was comparably modest, falling significantly short of April’s job loss. 

"Like many post-COVID industries, Texas’ new-home market may be stuck in a game of red light/green light with the virus calling the shots," Roberson said. "National builder sentiment improved considerably once the lockdowns began to relax and foot-traffic improved. Unfortunately for Texas, building permit counts for single-family homes haven’t recovered and are currently low when they should be high due to summer seasonality. This likely means bad news for future new-home sales, which means builder sentiment could recoil."

Texas land expert: "There's a lot of country for sale, and oil patch buyers have vanished," says Center Research Economist Dr. Charles Gilliland. Despite COVID-19-induced shutdowns and plummeting oil prices, the overall Texas land market did post some encouraging results.
Tune in Tuesday, Aug. 4, on Facebook Live as Dr. Gilliland gives a region-by-region update of sales, prices, and transactions, and his assessment of what lies ahead for rural lands of Texas in the remainder of 2020. Check out our event page for more.

Texas unemployment claims fall for second straight week

COLLEGE STATION (Real Estate Center) – In the week ending July 25, Texas' initial unemployment claims decreased to a little over 81,300. That brings the total since March 21 to 3.08 million, according to data from the U.S. Department of Labor (DOL).

This marks the third consecutive week of declines as the number of daily new COVID-19 cases trended downward. 

Despite the decrease in new claims, the number of Texans who continue to claim unemployment insurance increased the week of July 18 to 1.2 million.

"This increase is worrisome, indicating that people continue to find themselves unemployed," said Real Estate Center Research Economist Dr. Luis Torres.​

According to data from the DOL and the Employment and Training Administration, the number of initial unemployment claims decreased the week of July 18 in Texas' major and border metros. This marks the second consecutive week of declines.

With almost 688,300 claims, Houston has the largest ​cumulative number of unemployment claims of any Texas metro.

Here are Center estimates for the other three major and the four border metros from March 21 to July 18:
  • Dallas-Fort Worth-Arlington, 661,800 claims;
  • San Antonio-New Braunfels, 210,300 claims;
  • Austin-Round Rock, 183,100 claims;
  • McAllen-Edinburg-Mission, 79,300 claims;​
  • El Paso, 69,300 claims;
  • Brownsville-Harlingen, 35,100 claims; and
  • Laredo, 21,300 claims.
​Although McAllen saw decline in new unemployment claims, its overall coronavirus cases and deaths have increased at a significant rate, negatively impacting the local economy's recovery.

Accommodation and food services, healthcare and social assistance, retail trade, and administrative/support/waste management/remediation services represented the sectors with the biggest unemployment claims.

Nearly 54.1 million Americans have filed unemployment claims in the past 19 weeks, and new claims increased the week ending July 25. This is the second consecutive week of increases, raising concerns that the recovery could be stalling nationally.
Podcast 446: COVID-19's impact on Texas housing
After Texas’ stay-at-home restrictions began expiring in May, many were eager to see the economy begin to bounce back from the pandemic. How did the Texas housing market fare during the outbreak? Center Chief Economist Dr. Jim Gaines shares his thoughts on our latest Red Zone podcast.

Pandemic creates Texas manufactured housing backlog

COLLEGE STATION (Real Estate Center) – Consumer demand for Texas manufactured housing rose in July, but COVID-19-related disruptions hindered the industry’s ability to meet orders and created a backlog.

"As coronavirus cases rose through the first half of July, the state's manufactured housing plants had to operate with a reduced workforce," said Rob Ripperda, vice president of operations at the Texas Manufactured Housing Association (TMHA). "Employees with fevers or symptoms had to remain home and out of the factory until they cleared the return-to-work guidelines. These guidelines are set at the corporate level, and follow the recommendations posted by the Centers for Disease Control and Prevention."

In addition to labor-supply constraints, the price of raw materials elevated. Lumber and steel account for the largest input share for manufactured housing. Rising material costs, however, were offset by higher sale prices.

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.

Overall, the manufacturers noted favorable levels of business activity and remained optimistic for the second half of 2020. Production is projected to increase in sync with sale prices, despite rising uncertainty and ongoing supply-chain disruptions.

For more on manufactured housing, read "The Next Generation: Mainstreaming Manufactured Housing" by Center Research Economist Dr. Harold Hunt.
Enter Out 2020 Photo Contest
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Lockheed Martin taking 220K sf outside Texarkana

​​​NEW BOSTON (REBusiness Online) – Lockheed Martin has signed a 220,000-sf industrial lease at the TexAmericas Ce​nter outside of Texarkana.

The firm will take floor space in Building 333 at 107 Chapel Ln. The building is currently leased to Red River Army Depot until 2024.

It will undergo improvements requested and paid for by Lockheed Martin as part of its public/private partnership with Red River. 
Helping Texans make the best real estate decisions since 1971.

BCS housing market recovering from COVID-19 dip 

​COLLEGE STATION (The Eagle) – The local hou​sing market showed strength in June after falling for the first months of the pandemic. 

Listings increased 14.1 percent from June 2019 to 446 listings closed, according to the Bryan-College Station Regional Association of Realtors. 

The median home sale price rose 2.5 percent to $226,500. 

Homes spent an average of 106 days on the market, nine days longer than last year. 

Inventory fell to a record low of 2.7 months. The Real Estate Center considers six to 6.5 months of inventory a balanced market.
Looking for more real estate news? Our NewsTalk Texas feed has all the latest headlines. Here's a sample:

First phase of Lower Heights MXU project nearing completion

​​​HOUSTON (REBusiness Online) – Gulf Coast Commercial Group is wrapping up the first phase of the 24-acre Lower Heights mixed-use development along I-10.

The most recent addition to the project is a 35,000-sf office building with street-level retail space leased to Central Bank and SheSpace.

There is also a 375-unit apartment community called Alexan Lower Heights. The five-story, Class A complex offers studio and one- and two-bedroom units.​

The project's 37,000-sf retail block is home to Total Wine and Ulta Beauty.

Future phases call for additional retail, office, and multifamily space. ​
market viewer screen shotTexas Realtors' MarketViewer tool helps members and their clients quickly understand the market statistics in their area. This powerful tool is a member benefit available exclusively to Texas Realtors and local Realtor associations in Texas. Data are compiled and analyzed through a research agreement between Texas Realtors, the Real Estate Center, and all MLSs across the state. 

Mid-rise office building coming to East Austin 

​​AUSTIN (Austin Business Journal) – 11E5 LLC and Endeavor Real Estate Group are developing a six-story office building at 1100 E. 5th St. 

The building will have ground-floor restaurant and retail space and five levels of underground parking.      

Construction will be complete in 2023. 

Kimley-Horn & Associates Inc. is the civil engineer. Thoughtbarn and Delineate Studios are designing the project.
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First phase of Fort Worth industrial park underway

​​FORT WORTH (Dallas Morning News) – Jackson-Shaw has filed construction permits for the first three buildings in its new 46 Ranch Logistics Park.

Located at Altame​sa Blvd. and Campus Dr., the $15 million project will eventually include two million sf of industrial space across 170 acres.

The 560,000-sf first phase will be ready in early 2021.

Stream Realty Partners is handling leasing.

53-story high-rise coming to Rainey Street 

​​​AUSTIN (Austin Business Journal) – Urbanspace is developing a 53-story hotel and residential tower at 90 and 92 Rainey St.

The tower will include 290 apartm​ents and a 293-room hotel. 

Kimley-Horn and Associates Inc. is the engineer. 

Construction will begin in 2021. 
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