Texas’ Housing Market is Smoking

The recovery in Texas’ single-family housing market began more than three years ago. Transaction volume and prices are increasing. As we expected, 2013 turned out to be a great year for the residential brokerage industry. Let’s take a look at just how robust the market was last year.

First, residential transaction volume was 275,829 homes sold in 2013. This was up nearly 16 percent from 2012 and up 35 percent from the cyclical low in 2010. Sales volume in 2013 was the second highest volume in Texas history. Only the peak year of 2006 was higher.

chart 1

Second, the dollar volume of residential sales hit a record high in 2013. Dollar volume was almost $62.1 billion, well above the previous peak of $53.8 billion in 2006.

Chart 2

Third, the average price of homes sold in Texas hit a record high in 2013 as well. The average price was $225,100, up 9.3 percent from the previous year.

We must keep in mind that the product mix of houses sold in 2013 was different than 2012. In 2013, there was a smaller percentage of distressed sales than the year before. This fact alone could cause the reported price increase in 2013 to overstate the true performance in the market. When you look at a longer time frame, the average price in 2013 was up 41 percent from a decade ago.

Chart 3

As you can see, the combination of job growth in Texas, unbelievably low mortgage rates and positive home price appreciation created a very strong market for houses in Texas in 2013. With continued job growth and home price appreciation, the Texas market should be stronger this year, even if mortgage rates inch up during the year.

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