Pent-up demand from an economic slowdown in the spring may be the reason for a surge in the housing market this summer that continued through July.
The A&M University Real Estate Center said June saw strong sales in existing homes sold and July broke records with nearly 35,000 houses closed that month.
“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.
Existing-home sales increased 13.5 percent relative to July 2019, but sales were still below year-to-date levels (January through July 2020 compared to 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.
Across the country, existing-home sales rose 24.7 percent month over month, similar to gains in Texas.
“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.”
MORE: Texas homeownership highest in eight years
An ongoing challenge is keeping up with the demand for single-family housing, especially homes priced less than $300,000.
Inventory of existing homes is at a record low of 2.5 months, a full month less than levels in 2019.
New home listings increased, but still fail to keep up with sales activity.
The housing shortage could contribute to higher sale prices.
The median price for homes sold in Texas was more than $260,000, the highest since the Real Estate Center began record keeping. The price is an 11 percent jump from median home price in 2019.
“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.”
MORE: Wichita Falls home sales dip only slightly during COVID-19, median price rises
A recent study by WalletHub showed three Texas metro areas in the top 10 best real estate markets in the country.
Based on factors including affordability and economic environment, Frisco ranked third on the list, Austin was seventh and Denton was ninth. Frisco also ranked the second lowed for foreclosure rates.
In the United States, the median existing-home price was more than $300,000 for the first time after an 8.5 percent increase. This price similarly may be biased higher because of compositional differences.
The Real Estate Center was created by the state legislature to meet the needs of many audiences, including the real estate industry, instructors, researchers, and the public. The Center is part of Mays Business School at Texas A&M University.
Claire Kowalick, a senior journalist for the Times Record News, covers local government, military and MSU Texas. If you have a news tip, contact Claire at ckowalick@gannett.com. Twitter: @KowalickNews.
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August 26, 2020 at 04:11AM
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Housing market summer boom in Texas continued in July - Times Record News
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