In a surprise turn, the almost always fast growing Texas housing market slowed significantly in the first quarter of 2014, while single-family home prices continued to increase and inventory reached a new historic low, according to the first quarter report from the Texas Association of Realtors.
“While the demand for Texas housing has remained strong, single-family home sales growth was relatively flat compared to the first quarter of 2013,” said Dan Hatfield, chairman of the TAR. “Severe weather at the beginning of the year, consistently shrinking housing inventory and tighter lending standards created a ‘perfect storm’ for slowed sales growth and a continued increase in prices.”
According to the Texas Quarterly Housing Report, 55,322 single-family homes were sold in Texas in the first quarter of 2014, which is 1.92% more than the same quarter of 2013. During the same time frame, the median price for Texas homes was $172,900, up 9.43% from 2013-Q1, and the average price increased 10.42% to $225,337.
“It’s important to remember that Texas’ housing demand is still strong, being fueled by true economic, job and population growth. In addition, 2013 was the second-best year for Texas real estate,” said Jim Gaines, Ph.D., economist with the Real Estate Center at Texas A&M University. “We’re comparing current data to very strong historical figures, making year-over-year increases for 2014 much more modest.”
During the first quarter of 2014, the statewide inventory of homes decreased by 19.04% to 3.4 months, a new all-time low for the state. Inventory is especially low in Texas’ four major metro areas, where even the metro with the highest inventory, San Antonio at 4.3 months, is still well below the 6.5 months that the Real Estate Center at Texas A&M University cites as a balanced market.
Gaines added, “As cautioned in the 2013-Q4 report, continued inventory shortages have begun to inhibit sales volumes statewide. Housing development is on the rise again, but it will be some time before Texas sees the benefits of that activity. While housing demand shows no signs of declining, Texas will likely continue to see constrained home sales growth throughout the rest of the year, while home prices will continue to expand at double-digit rates.”