Mid-Year 2021 Texas Housing Outlook

The Texas Real Estate Research Center produced its 2021 Mid-Year Texas Housing and Economic Outlook, with the remainder of this year looking similar to the year thus far for the housing market: “strong demand with low inventories accompanied by strong price growth.” As has been the case, homes priced less than $300,000 will be especially tight.

Inventory levels, however, should show improvement, according to the report, as they “seem to have reached a trough and are rising, easing some of the price pressures.”

New home construction, which experienced shortages of labor as well as lumber and other needed items this year, ultimately should show positive growth for the year. “The supply bottlenecks faced by homebuilders are anticipated to be resolved in the latter part of this year or next year.” Housing permits averaged 22.7 percent growth over the last two years, well above the long term average of 5.9 percent. In 2022, both permits and starts are expected to grow but not at the heightened pace of the last two years. “New-home construction is projected to grow in 2022 as the pandemic housing market frenzy dissipates and the market stabilizes toward a more sustainable long-run path.”

The report said aging millennials and out-of-state migration will be driving factors for the rest of this year and 2022.

Mortgage rates may increase but are not expected to “become a major headwind for housing demand” in the near future. They have helped offset rising prices thus far.

In 2022, home inventory is expected to increase, and demand is expected to remain relatively strong, helping to balance the market and slow the rate of home appreciation.

For the overall Texas economy, growth prospects are improved due to the reopening of the state and an uptick in the oil industry.