Existing homes sold in June through Texas Multiple Listing Services (MLSs) surpassed 29,000 for the first time since August 2019. Housing experts for the Real Estate Center at Texas A&M University point out the trend may not last.
“Texas’ housing market rebounded after two and a half months of sluggish activity amid the economic shutdown and social distancing measures,” said James Gaines, chief economist for the Real Estate Center. “June housing activity recovered substantial pent-up demand from the economic shutdown.”
After accounting for seasonal factors, the state’s MLS homes sales increased 34% relative to May but remained below first-quarter levels. “This positive momentum, however, may be temporary as new coronavirus cases have accelerated in recent weeks,” said Gaines.
According to the National Association of Realtors, existing-home sales across the country exhibited a similar pattern with a 20.7 percent increase from May but remained subdued on a year-over-year basis. Low mortgage rates bolstered demand for first-time homebuyers, which accounted for 35% of national sales in June.
Center Research economist Luis Torres said there are fundamental challenges facing the housing market in addition to the COVID-19 pandemic.
“The months of inventory for existing homes plummeted to a record low of 2.7 months, exacerbating shortages, particularly for homes priced less than $300,000,” said Torres. “The number of new listings hitting the market stabilized but lagged year-ago levels by nearly 9 percent. This imbalance has housing affordability implications, as evidenced by a 4 percent year-over-year increase in the Texas Repeat Sales Index.”
The median price for an existing Texas home sold jumped from $235,000 in May to $250,000 in June. Texas remained price competitive relative to the rest of the nation, where the median price was $284,600. “While June was a positive month for sales activity, the resurgence in contracted coronavirus cases and hospitalizations could reverse the recovery and remains the greatest obstacle to the housing market,” Torres said.
Read more about the Real Estate Center's research staff's thoughts on the economic impact of COVID-19 in Texas.