real estate
Texas existing home sales rebound in March, but supply-side constraints persist
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The Texas housing market rebounded in March after Winter Storm Uri shocked activity during the previous month. Existing homes sold through Texas Multiple Listing Services increased 9.8 percent on a month-over-month (MOM) basis. “Texas housing sales continued to trend upward amid historically low mortgage-interest rates and waning effects of the pandemic,” according to 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), existing home sales fell 3.7 percent MOM but increased 12.3 percent over March 2020. Annual metrics, however, should be interpreted with caution. “We have reached the one-year mark of when COVID-19 prompted a nationwide economic halt, which is distorting standard year-over-year measures,” said Torres. “It may be more useful to look at higher-frequency data or to make comparisons with 2019 for the next few months.” Existing home sales in Texas were 16 percent higher than in March 2019. Supply-side activity also rebounded from the February weather shock, with a 16 percent MOM increase in the number of new
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B oerne B usiness M onthly | May 2021
listings on the market. New listings, however, have failed to keep pace with sales, leading to diminished inventories across the state. “Texas’ months of inventory sank below 1.3 months for the first time in series history, highlighting the shortage of homes on the market,” said Torres. “The lack of supply, particularly for homes priced under $300,000, is one of the greatest challenges to the housing market and, more broadly, the Texas economy.” NAR announced similar constraints at the national level pushed the median existing home sale price up 17.2 percent YOY. Existing homes in Texas had a similar YOY price increase, reaching a record $279,740. Torres notes how these explosive growth numbers may be deceptive. “While the median price is more robust to outliers than the average price, compositional changes in home sales can still cloud real growth in prices,” he said. “Our Texas Repeat Sales Index avoids this composition bias, showing annual growth in real housing prices closer to 12 percent. This rate of home-price appreciation, however, is still taxing housing affordability across the state.” BBM Information courtesy of Texas Real Estate Research Center.
