COLLEGE STATION, Tx. – Texas’ housing market continued its summer surge in July after coming to screeching halt in April and May due to the economic shutdown and social distancing measures.
“Pent-up demand from the spring fueled housing activity across the state,” said Dr. James Gaines, chief economist for the Real Estate Center at Texas A&M University. “After a strong June, existing homes sold through Texas Multiple Listing Services in July broke record highs with nearly 35,000 closed listings.
Existing-home sales increased 13.5 percent relative to July 2019 but remained below year-todate levels (comparing January through July in 2020 and 2019).
“Low mortgage rates and residual demand from April and May bolstered sales activity, but the resurgence of new coronavirus cases during the summer may temper growth in coming months,” said Gaines.
According to the National Association of Realtors (NAR), existing-home sales across the country soared 24.7 percent month over month and 8.7 percent relative to July 2019, mirroring Texas’ two month rebound.
“The federal government’s initial bolstering of unemployment insurance and the foreclosure moratorium kept the economy afloat during one of the greatest shocks in our lifetime,” said
Center Research Economist Dr. Luis Torres. “Moreover, the Federal Reserve’s monetary policy actions have pushed down interest and mortgage rates. The situation, however, is still developing from both a public health and economic perspective, and many challenges still lie ahead.”
One of those challenges is the ongoing shortage of single-family housing, particularly for homes priced less than $300,000. The months of inventory for all existing homes reached a record low of 2.5 months, a full month less than year-ago levels. While the number of new listings on the market increased, it failed to keep pace with sales activity.
The housing shortage contributed to higher sale prices. The median price for an existing home sold in Texas surpassed $260,000 for the first time in series history, jumping 11 percent year over year. That double-digit increase, however, may be deceptive.
“Most of this price appreciation is attributed to the relative strength in the upper price cohorts,” said Torres. “The Texas Repeat Sales Index accounts for this bias and revealed more moderate growth at 4 percent.”
The national median existing-home price surpassed $300,000 for the first time after an 8.5 percent year-over-year increase but may suffer from a similar upward bias due to compositional changes.