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Texas New Home Sales Exploding with Increased Demand

published on September 15, 2020

Homebuilders across the state are racing to meet “exploding” demand for new homes, said Real Estate Center at Texas A&M University Chief Economist Dr. Jim Gaines. With high demand and low inventory, new home prices are continuing to rise. However, he said, “Now is a good time to buy a home. Interest rates are low, mortgage lenders are generally approving loans easily, and future prices will be higher.”

Gaines cited the more stable segments of the market for the demand. “Market demand is now focused on the middle- to higher-income groups who have remained employed during the pandemic. This means higher-priced homes have been more active than lower-priced homes sought by workers more impacted by COVID-19.”

Additionally, “Millennials are not sitting out the housing market. The better-educated group with jobs that continue during the pandemic are active and now acquiring homes.”

The primary restraint on the market is supply, he said. And while the pandemic may have held back some sellers, “The homebuying process can be done completely online without face-to-face communications. Most people would probably prefer not to do business remotely, especially older millennials, but the younger age group is much more receptive. Service providers are accommodating the changes in processes and technology.”

Gaines also said that interest rates should remain low for the near future. “It’s not likely the Federal Reserve will increase interest rates anytime soon. They are on record as saying they will allow inflation to go to three percent or more and stay there for a while to get the overall economy moving.”

Gaines did say younger millennials “may have had jobs more susceptible to closing and simply are going to have to get through the recovery process before becoming homeowners.”

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