AUSTIN – With the inventory near record lows, sellers are going to control the Texas housing market for a long time, a Texas economist said in report by the Texas Association of Realtors.
Many consider a balanced housing market when the inventory stands at a 6 months supply. When the supply is much lower, it’s a sellers market; when reaches a 9 or 10 months supply it’s a buyers market.
According to the 2014-Q3 Texas Quarterly Housing Report released today by the Texas Association of Realtors, Monthly housing inventory in Texas increased on a quarterly basis for the second quarter in a row, rising 2.77 percent from 2014-Q2 to 3.7 months. While inventory is still down 7.5 percent compared to 2013-Q3, the Lone Star State’s year-over-year decreases in inventory have eased significantly from the sharp 20- to 30-percent drops experienced over the last two years.
However, it will be some time before Texas’ housing inventory returns to 6.5 months, the level which the Real Estate Center at Texas A&M University equates to a balanced housing market. Jim Gaines, Ph.D., economist with the Real Estate Center explains:
“Developers are building homes about as fast as they can, but continued shortages in labor and vacant developed lots are keeping homebuilders from increasing production even further,” said Gaines. “Combined with higher home prices and tough lending standards, the Texas housing market will remain very competitive for homebuyers into 2015.”
Home prices continued to increase at a steady, but slower pace in 2014-Q3. Median price increased 6.84 percent year-over-year to $188,900, while average price increased 5.91 percent from 2013-Q3 to $243,548. Only a few local markets are still seeing the near double-digit home price gains that Texas has experienced since 2012. In Texas’ major metros and statewide, home price increases have slowed to between five and nine percent year-over-year.
“The third quarter of the year is typically a much slower sales period – summer is over, school has started and families are staying put for the upcoming holiday season. That was not the case this year,” said Dan Hatfield, chairman of the Texas Association of Realtors. “Texas home sales continue to slightly exceed last year’s levels. If this trend continues, 2014 will surpass 2013 to become the second-best year ever for Texas real estate.”
According to the report, 80,851 Texas homes were sold in 2014-Q3. This is only 0.63 percent less than home sales volume in the previous quarter and 0.61 percent higher than home sales volume in 2013-Q3. While several local Texas markets have experienced slight declines in home sales in 2014, statewide home sales have remained steady due to much-needed gains in housing inventory and a continually strong housing demand.