Current Market Update

As of the latest housing market updates in November, Texas’ residential real estate sector continues to exhibit resilience and adaptability in the face of evolving economic conditions. Despite the persistently high interest rates, the market has seen notable shifts in various key indicators.

Positive Trends in November Housing Market November has brought encouraging developments to Texas’ residential real estate sector. Despite the ongoing challenges posed by elevated interest rates, the market has witnessed a commendable 9.5 percent increase in total home sales on the consumer side. Simultaneously, construction permits have accelerated by 5.3 percent on the supplier side. This points to a robust market, showcasing adaptability in the midst of external pressures.

Dynamic Home Sales Resurgence In response to a slowdown in the real estate industry, Texas has experienced a resurgence in total home sales, rebounding from a previous three-year low. November saw over 27,000 transactions, reflecting an impressive month-over-month (MOM) growth rate of 9.5 percent. While this represents a substantial recovery, it’s essential to note that sales figures remain 8 percent lower compared to the same period last year. The positive growth, uniform across all four major metropolitan areas, demonstrates the market’s resilience.

Shifts in Existing and New Construction Markets Reduced home sales were predominantly influenced by constrained sales of existing homes, while the new construction market witnessed a notable uptick in demand, boasting a remarkable 20 percent growth over the past year. Consequently, the market share of new construction sales has risen by five percentage points, reaching 21.7 percent. This suggests a shift in buyer preferences and underscores the importance of new construction in meeting housing demand.

Market Stabilization Indicators The state’s average days on market (DOM) have shown signs of stabilization, decreasing from 57 to 55 days. This deviation from the previous rebound trend suggests a potential stabilization in the housing market. Among major metropolitan areas, Austin (69 days) and San Antonio (66 days) reported longer-than-average DOM, while Dallas and Houston demonstrated figures of 47 and 48 days, respectively.

Growing Housing Inventory Housing supplies continue to accumulate, with active listings trending upward since February. In November, the number of homes available for sale increased by 5.9 percent, reaching a total of 90,750 listings. The four major metropolitan areas reported monthly gains ranging from 4.4 percent to 5.2 percent, with Dallas leading the way. Despite the rise in active listings, the months of inventory (MOI) experienced a marginal decrease to 3.2 months, reflecting the impact of re-surging home sales.

Current Mortgage Rate Landscape As of November, the housing market is navigating the impact of interest rate hikes. The Federal Home Loan Mortgage Corporation’s 30-year fixed-rate has seen a modest increase to 7.1 percent, up 23 basis points. This elevation in mortgage rates is expected to influence the cost of home ownership and may contribute to shifts in mortgage applications.

Mortgage Application Trends Under the influence of higher mortgage rates, mortgage loan applications have faced challenges in 2023, with a reported volume index drop of over 20 percent in the past eight months. The ongoing trend indicates a cautious approach from potential buyers amid changing economic conditions.

In summary, Texas’ housing market continues to adapt to external factors, showcasing positive trends in home sales, new construction, and housing inventory. While challenges persist, the market’s resilience and adaptability provide a foundation for stability and growth in the coming months.