Texas Economy Experiences Headwinds but Remains Strong
published on October 27, 2023
Texas home sales rebounded at the end of the summer, according to the latest Outlook for the Texas Economy by Texas Real Estate Research Center. Sales statewide were up 9.5 percent month over month, while still eight percent lower than last year’s total. This was consistent across all four metro areas, with increases between 0.8 and 9.7 percent for Austin-Round Rock, Houston-The Woodlands-Sugarland, Dallas-Forth Worth-Arlington, and San Antonio-New Braunfels. This follows a three-year low the month prior. The Austin region was up 7.5 percent, Dallas 0.8 percent, Houston 4.1 percent, and San Antonio 9.7 percent.
According to the report, sales numbers were constrained by existing homes, while sales of new construction homes spiked. New construction increased by 20 percent in one year, perhaps in part due to loan interest rate incentives to combat multi-decade rate highs. New home sales increased five percent to reach 21.7 percent of overall home sales, meaning over one in five home sold was new. The report cited “owners’ reluctance to give up their homes in exchange for a higher-cost home” as one of the constraints on the supply of existing homes.
Inflation affected the overall Texas economy. The Consumer Price Index increased 0.6 percent month over month, with gasoline making up over 50 percent of the increase. The shelter index increased for the 40th straight month, due to increasing rents.
However, employment expanded slightly. The participation rate was high at 64.6 percent, while unemployment was unchanged at 4.1 percent. “Over the course of a year, Texas attracted 432,903 new workers, continuing to surpass the record-high total labor force.” Additionally, “Strong expectations for future general business remained unchanged.”
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