Texas Housing Sales Crunch Amidst Restriction
published on May 25, 2021
Texas housing sales were down 0.8 percent month over month in April 2021, constrained by lack of inventory, as well as higher prices and mortgage rates, according to the Texas Real Estate Research Center at Texas A&M University.
“The number of new MLS listings rose for the second straight month in April, but Texas’ months of inventory remained less than 1.3 months,” said Texas Real Estate Research Center Research Economist Dr. Luis Torres. “For homes priced less than $300,000, which constitutes three-quarters of total sales, only one month of inventory was available. In the major metros, inventory was even more constrained.”
Even luxury homes – homes priced more than $500,000 – experienced constraint in inventory, dropping to a 2.4-month supply for the state. Inventory tends to be greater at higher price points.
Torres said, “Our Texas Repeat Sales Home Price Index, which accounts for the fact that the sales composition is shifting toward higher-priced homes due to lack of inventory at the bottom price cohorts, corroborated substantial and unsustainable home-price appreciation of 10.4 percent annual growth during 1Q2020. Meanwhile, the Center’s Home Affordability Index revealed housing affordability declined in Austin, Fort Worth, and Houston over the past three months relative to 4Q2020.”
Austin’s inventory was the lowest among the metros, dropping to 0.4 months. In Dallas and Fort Worth, inventory dropped to one month, and inventory dropped to 1.3 months in San Antonio. Houston had the highest at 1.6 months of supply.
The median credit profiles of Texas borrowers improved during March, according to Torres, indicating that only the most qualified housing applicants are able to outbid competition for desirable homes. Mortgage-interest rates also have crept up, from 2.68 percent in December 2020 to 3.06 percent in April 2021.
Nationally, the real estate market is much the same. Existing-home sales decreased 2.4 percent in April 2021, the third straight monthly decrease, according to the National Association of Realtors®. National homebuyers have some of the same challenges as Texas homebuyers: low inventory, rapid median-price growth, and tough competition.
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