Outlook for the Texas Economy

October 2017 Summary1

The Texas economy advanced as Houston’s recovery continued, and the price of oil reached an eight-month high. Rebounds in leisure-hospitality and accommodation-food services pushed monthly employment growth above 71,000 new jobs. The statewide unemployment rate fell to a record low 3.9 percent but failed to significantly boost wages. Gulf Coast rebuilding efforts supported the construction industry, generating rapid job creation and increased construction values. A combination of higher oil prices and declines in the Texas trade-weighted value of the dollar boosted crude oil exports to record levels. Potential headwinds to the Texas economy include energy price volatility and trade uncertainty, especially with Mexico.

Recently released 2Q17 gross state product data for Texas indicated 6.2 percent quarterly annualized growth amid accelerated activity in mining, manufacturing, and real estate. The economic expansion continued through the third quarter as the Texas Business Cycle Index (a measure of current economic activity in the state) posted over 5 percent quarterly annualized growth in each of the past three months. The Austin and San Antonio indices surpassed the state level at 7.2 and 5.7 percent quarterly annualized, respectively, after solid job gains and falling unemployment. Similarly, the Dallas index accelerated above 5 percent for the first time this year, while Fort Worth slowed slightly to 3.6 percent growth. Hurricane recovery efforts stabilized the Houston index after contracting 5.5 percent in the previous month.

The Texas Leading Economic Index (a measure of future directional changes in the business cycle) inched forward as growth in the U.S. leading index and higher oil prices outweighed a slowdown in monthly well permits issued. The Texas Consumer Confidence Index flattened after taking a double digit hit from Hurricane Harvey in the previous month but should trend upward as the economic expansion advances.

Interest rates elevated after the U.S. Senate approved a budget resolution, opening the door for tax reform. The potential deficit increase resulting from tax breaks would expand the number of bonds issued, weighing on the price of existing debt. If tax cuts sufficiently stimulate economic activity, it could attract investors away from bonds in favor of riskier assets. Yields received an extra boost after the release of the Federal Reserve Board minutes, indicating a high likelihood of raising the federal funds rate in December. As a result, the ten-year U.S. Treasury bond yield rebounded from a year-to-date (YTD) low last month, reaching 2.36 percent. The Federal Home Loan Mortgage Corporation 30-year fixed-ratealso reversed its downward trend, reaching 3.9 percent after slipping in the third quarter.

Texas housing sales expanded across the state despite shortages of homes priced under $300,000. Current residential construction activity, measured by the Residential Construction Cycle (Coincident) Index, flattened as industry employment gains offset falling construction values. However, rebounds in weighted building permits and housing starts accelerated the Texas Residential Construction Leading Index for the first time since March, signaling increased activity in upcoming months. (For additional housing commentary and statistics, see Texas Housing Insight at recenter.tamu.edu.)

The average West Texas intermediate crude oil spot price increased to $51.582, the highest since February, driven by geopolitical tension in the Middle East and hopes of extended OPEC production cuts. Despite the number of active rigsin Texas falling to 4422crude oil production rebounded 6.0 percent amid rising well completions. Increased shale activity could counter OPEC supply cuts, thereby hindering upward oil price momentum. The Henry Hub natural gas spot price fell to $2.88 per million BTU2 (British thermal unit) despite decreased global supply, a trend that could continue amid predictions of a colder-than-average winter in the northern United States.

Texas monthly nonfarm employment added 71,500 jobs as Houston landed back on its feet after two months of hurricane-related payroll declines. The Texas unemployment rate dipped to a record low 3.9 percent as labor markets tightened across the state. In Austin, the unemployment rate fell to 2.7 percent, the lowest since 1999. Unemployment fell to 3.2 percent in both Dallas and Fort Worth, while settling at 3.0 percent in San Antonio. Houston unemployment persisted above the state level at 4.4 percent, still well below its historical average. Revised data revealed a surge in initial unemployment insurance claims in Texas through September, rather than the large drop reported last month. However, the series shifted to more typical levels, falling 29.6 percent this month and should decline even further as the Houston economy recovers. Despite the tightening labor market, the Texas labor force participation rate remained at a historically low 63.0 percent.

This month’s payroll expansion occurred primarily in Houston, where recoveries in the leisure and hospitality industry as well as retail trade led to 27,300 total new jobs. Dallas added jobs in both goods-producing and service-providing sectors, elevating its 2017 job creation total to 41,500. San Antonio maintained the largest YTD job growth rate at 2.3 percent, adding over 2,300 jobs in each of the past five months. Austin and Fort Worth added 3,000 and 2,500 jobs, respectively, as growth in leisure and hospitality offset goods-producing employment contractions.

Statewide, the service-providing sector more than recovered the 15,800 jobs lost in August and September. The leisure and hospitality subsector led the charge with 34,700 jobs created, followed by accommodation and food services with 30,000. The Texas Service Sector Outlook Survey corroborated these trends as the wages and benefits, hours worked, and employment indices elevated. Increases in the revenue and service sector outlook indices reflected improved conditions after the hurricane.

The retail industry fared similarly well, recovering nearly a third of the 25,100 jobs lost between February and September. The Texas Retail Outlook Survey employment indices indicated job growth but slightly lower wage pressures. Despite approaching the holiday season, retailer optimism and future outlook decelerated.

The goods-producing sector maintained its steady expansion, adding 6,800 jobs and pushing the YTD total above 84,000. Supported by higher oil prices, Texas ranked second nationally in year-over year (YOY) employment growth in mining and logging at 16.9 percent, adding 3,200 in October. The construction industry created 4,500 jobs amid rebuilding efforts around the Gulf Coast, pushing annualized growth to 3.1 percent, nearly twice the national rate. The total value of Texas construction increased for the first time on a three-month moving average since May, led by investment in stores, restaurants, offices, and bank buildings. Residential construction values remained negative, but single-family home building ticked upward.

Texas manufacturing employment growth slowed from 5.4 to 4.1 percent annualized quarterly, shedding 900 jobs this month. Dallas posted the highest manufacturing growth rate at 8.0 percent, reaching a 20-year high after lackluster performance over the past two years. Fort Worth maintained 7.7 percent growth, thereby contributing to the robustness of the manufacturing industry in North Texas. Austin’s manufacturing growth rate accelerated to 4.8 percent after stagnating late this summer, while growth in San Antonio decelerated to 2.6 percent. The Houston annualized employment growth rate fell to -2.3 percent, a drastic slide from double-digit positive readings between April and July. Houston has lost over 4,000 durable-goods manufacturing jobs since August, all of which should recover as economic conditions normalize.

The Texas Manufacturing Outlook Survey confirmed the overall industry expansion, indicating increased activity and demand. The production index extended its positive trend to 16 months, and over 30 percent of respondents reported improved business activity. The hours worked and wage indices slowed, supporting recent labor market adjustments in manufacturing, particularly along the Gulf Coast. Respondents mentioned prolonged supply chain disruptions from the hurricane and subsequent flooding but remained optimistic for the fourth quarter.

Despite low unemployment levels, employee compensation remained relatively mute throughout the state. Real Texas private hourly earnings hovered around 1.9 percent YTD after sliding in August and September. Wages fell 1.1 and 2.2 percent YOY in Fort Worth and Houston, respectively. Hourly earnings rose 0.8 percent in Austin—barely above last year’s level. Wage growth was more favorable in Dallas and San Antonio, rising 2.4 and 2.1 YOY, respectively.

While Texas wages lagged the national level by $0.40, Texas manufacturing jobs paid an 11.3 percent premium in hourly earnings relative to U.S. average. Fort Worth had the highest manufacturing wages, paying 48.2 percent more than the statewide average but were flat on the year. Manufacturing earnings fell 1.2 percent in Houston amid production process disruptions. San Antonio remained the outlier for wage growth, rising 14.7 percent YTD while remaining 19.5 percent below the Texas average.

The U.S. Consumer Price Index (CPI) fell to 2.0 percent YOY after hurricane-related energy price spikes calmed. The core inflation rate, which excludes the often-volatile energy and food sectors, increased 1.8 percent YOY, indicating upward price pressure. Prices remained elevated in Houston as the local CPI rose 2.3 percent YOY, the highest since 2014. Gasoline and medical care expenses rose over 4.5 YOY, accounting for most of the Houston inflation.

The U.S. real goods trade deficit increased by $3.1 billion to $65.3 billion as commodity imports rose and exports flattened. Total Texas commodity and manufacturing exports surged 11.2 percent and 10.7 percent, respectively, as petroleum exports returned to pre-Harvey levels. Texas crude oil exports continued to hit record highs, rising 15.8 percent amid higher oil prices. Furthermore, the Texas trade-weighted value of the dollar3 fell 10.3 percent YTD, thereby increasing the attractiveness of Texas goods and services to foreign consumers.

Strong global economic growth and the falling value of the dollar will likely support upward trending export growth throughout the next two quarters. Mexico, Texas’ largest trade partner, received more than a third of September exports but slowed economically in recent months. NAFTA renegotiations and the potential of a Mexican recession remained potential headwinds to Texas-Mexico trade activity.

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1 All monthly measurements are calculated using seasonally adjusted data, and percentage changes are calculated month-over-month, unless stated otherwise.

2 Nonseasonally adjusted.

3 The Texas trade-weighted value of the dollar is generated by the Federal Reserve Bank of Dallas. Its release typically lags the Outlook for the Texas Economy by one month.

Manufacturing impact tops $40 billion

An employee at the Toyota Motor Manufacturing Texas Inc. plant in San Antonio works on the assembly line. The plant makes Tacoma and Tundra pickup trucks. A new study by Trinity University concludes that manufacturing had a $40.5 billion economic impact on San Antonio and surrounding communities in 2016.

SAN ANTONIO – The region’s manufacturing sector had an overall economic impact of $40.5 billion in 2016, according to a new study released by Trinity University.

The San Antonio Manufacturers Association (SAMA) commissioned the study, along with several other organizations.

With 1,544 companies considered manufacturers in San Antonio, the sector employed 51,904 people in 2016 with an average salary of $57,507; it paid nearly $3 billion in wages and salaries.

The transportation sector was the largest employer, accounting for nearly one-third of manufacturing workers—followed by equipment and metal products, diversified products, and materials and electricity.

Source: San Antonio Business Journal

Check out more San Antonio-New Braunfels Industrial Market Research.

Area: San Antonio-New Braunfels

Austinites Give Daily Commute the Boot

AUSTIN – More people are working from home in the Austin area than any other major U.S. city, according to Census Bureau data.

Nearly 9 percent of people ages 16 and up with jobs in the Austin area telecommute, the data show.
The national average is 5 percent.
So what’s up with Austin? Why do so many people work from home here?
Kara Kockelman, an engineering professor at the University of Texas, offered some insights into why:
EDUCATION
  • Austin has a lot of highly educated people, and those people tend to work in white-collar professional jobs where it’s possible to work from home.
TECH JOBS
  • Austin also has a large number of people who work in the tech industry, which is known for jobs that are tethered to a computer and could be done virtually anywhere. There are roughly 120,000 people who work in Austin’s tech industry.
TWO-WORKER HOUSEHOLDS
  • Census data show that about 40 percent of Austin’s households have at least two workers.
TRAFFIC
  • And lastly, there’s the Austin traffic.

 

See the full report at the Austin American-Statesman

Check out more employment stories across Texas.

“Well, well, well”—All’s well that ends well

“Well, well, well”—All’s well that ends well

An image of a oil well with a dramatic blue sky background.SAN ANTONIO – Despite challenges facing the oil and gas industry, advances in technology and improvements in efficiency continue to drive well costs down and keep the industry competitive.

That is according to executives who spoke at the Society of Petroleum Engineers’ Annual Technical Conference and Exhibition in San Antonio.

Drilling and completion costs are down about 40 percent from the peak of the oil boom, which came in mid-2014 at $107 per barrel before crashing to $26 by early 2016.

New wells in the first 90 days produce 4½ times the amount of oil—in the same area—as wells drilled five years ago.

Also, real-time monitoring of wells means that companies know exactly what’s going right or wrong at a particular well site.

National oil production in 2018 is expected to reach around 9.9 million barrels per day, and the Energy Information Administration expects the U.S. to become a net exporter of natural gas in 2017.

 

Read more at the San Antonio Express-News

More Regulations, More Days to Close

Dr. Anari and Gerald Klassen (Aug 8, 2017)
The Takeaway
Center research reveals that Dodd-Frank regulations extend the time from acceptance to closing by one week.

Given the importance of mortgage loans for Texas real estate markets and the state’s banking industry, the Real Estate Center embarked on a research program to investigate the impact of the Dodd-Frank Act on the time it takes to sell a home. The Center leveraged its long-term time series data to investigate the length of time to complete home sale transactions in Texas after an offer is accepted.

Center researchers studied the impact of the Wall Street Reform and Consumer Protection Act on the length of time to sell homes and close transactions in Texas’ two largest metropolitan housing markets, Houston-The Woodlands-Sugar Land (Houston) and Dallas-Fort Worth-Arlington (Dallas). The research found that:

  • The length of time to sell homes in the two metro areas has trended downward in the aftermath of the recovery from the Great Recession (GR).
  • The length of time to process home sale transactions after an offer is accepted has trended upward.
  • Consequently, the percentage of time devoted to closing transactions has been trending upward to the extent that processing the transaction accounts for more than 40 percent of the time needed to sell a home.

Dodd-Frank Act Effects

Every U.S. economic recession has ended in a blame game between proponents and opponents of more or less government intervention and regulation. Among a long list of culprits blamed for nearly eight million foreclosed homes and the GR of 2007–09, subprime mortgage lending was the most prominent. Advocates for less government intervention blamed government policies that overexpanded homeownership, Federal Reserve policies that engineered artificially low interest rates, government-sponsored entities (Fannie Mae and Freddie Mac) that subsidized risky loans, and so on.

Proponents of more government intervention blamed greedy bankers seeking quick profits, rating agencies (Moody’s, Standard and Poor’s, Fitch) colluding with bankers to defraud investors by giving misleading ratings to risky mortgage-related securities, borrowers who didn’t understand what they were being offered by predatory lenders, and so on.

As Hubert Humphrey said, “To err is human, to blame is politics.” In the immediate aftermath, advocates for more government intervention emerged victorious in the GR blame game. In response to widespread calls to learn from past mistakes, the administration passed the Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) in 2010.

The 3,500-plus pages of rules targeted changes to all parts of the U.S. financial system to “promote the financial stability of the United States.” An important part of the act was devoted to regulating mortgage loans on the presumption that loose mortgage loans were the real culprit behind the GR. The Mortgage Reform and Anti-Predatory Lending Act section of the Dodd-Frank Act has more than 200 pages of regulations to “assure that consumers are offered and receive residential mortgage loans on terms that reasonably reflect their ability to repay the loans and that are understandable and not unfair, deceptive, or abusive.”

To fulfill these objectives, the act sets minimum standards for mortgage originators, appraisals, escrow accounts, title agents, and other players in the mortgage field. It prohibits “mortgage originators from steering any consumer to a residential mortgage loan that the consumer lacks a reasonable ability to repay.”

To manage new loan regulations, the act created the Consumer Financial Protection Bureau (CFPB) to “promote fairness and transparency for mortgages, credit cards, and other consumer financial products and services.” Since its creation, the CFPB has been busy issuing rules making the Dodd-Frank Act an ongoing work-in-progress. Lenders and borrowers now need to spend more time being aware of the latest rulings of CFPB to update their knowledge of mortgage lending regulations.

The key words in the act are “the ability to repay.” The burden of verifying the ability of the borrower to repay the mortgage loan is on the lenders who are now required to check and document the borrowers’ current employment, current assets and income, credit history, monthly mortgage payments and related payments (taxes, insurance expenses), other debts, and borrowers’ debt-to-income ratios. Lenders should also determine how much income borrowers have left to pay for their living expenses after all housing costs are deducted from their incomes.

Since the passage of Dodd-Frank, there has been an ongoing debate between its advocates and opponents. Advocates argue that new mortgage regulations have prevented another nationwide mortgage default. Critics argue that the act and regulations have limited access to mortgage loans, particularly to first-time homebuyers and new retirees, resulting in fewer home sales. Banks spend millions of dollars to comply with the regulations. Compliance costs are especially important for small community banks. The increased costs have forced many of them to merge with larger banks or exit the mortgage lending business.

The debate regarding the impact of Dodd-Frank on finance and real estate markets has spurred research programs to quantify the impact of the act and empirically test the validity of various claims and counterclaims.

In a typical transaction, the time from offer acceptance to closing represents the time needed to prepare required documents, process the buyer’s mortgage application, and comply with regulations. Obviously, the more regulations and the more documentation, the more time needed to complete a homebuying transaction, but how long?

Regulations and Days-to-Close

The Center compiled monthly computations of days-on-market (DOM), days-to-close (DTC), and days-to-sell (DTS) for the two largest Texas metropolitan areas, Houston and Dallas, to test whether increased regulation has lengthened homebuying transactions in Texas. The two metros normally account for more than 55 percent of homes sold in Texas. DOM represents the number of days a house has been on the market from when it was listed for sale until an offer is accepted by the seller through a signed purchase agreement. DTC reflects the number of days from the offer acceptance date until the transaction closed. DTS is the sum of DOM and DTC. The monthly data run from January 2003 to December 2016.

The blue line in Figure 1 shows the number of DOM for single-family homes in Houston and includes short-term fluctuations and seasonality. The red line represents the long-term trend in DOM extracted using the Hodrick-Prescott filter. The trend shows decreasing DOM before the GR of 2007–09 from 83 days in January 2003 to 80 days in November 2006. This was followed by an increase to 84 days during the GR and finally trending downward during the local economic recovery after the GR to 55 days in December 2016.

The number of DTC following the offer acceptance on single-family homes in Houston trended downward before the GR, decreasing to 31 days in February 2006, then trended upward, reaching 37 days in May 2012 and 38 days in December 2016 (Figure 2). Compared with the pre-GR era, Houston’s homebuyers now need to wait one additional week to get the key for their purchased home.

The time series of DTS trended downward before the GR, decreasing to 111 days in September 2006, then trended upward to 119 days in March 2011 followed by a steep downward trend, falling to 89 days in September 2015 and ending at 91 days in December 2016 (Figure 3).

The percentage of time spent closing (mortgage application, appraisal, inspections, completing paperwork in compliance with Dodd-Frank regulations) after the offer is accepted can be calculated by dividing DTC by total DTS. The percentage of time spent closing the transaction in Houston was less than 28 percent before 2009. Since then it has risen, reaching 42 percent in December 2016 (Figure 4).

DOM for Dallas rose from 70 days in January 2003 to 82 days in September 2010. It fell during the local economic recovery after the GR to 34 days in December 2016 (Figure 5).

The DTC for Dallas trended downward before the GR, decreasing to 30 days in October 2007. Then it turned upward, reaching 36 days in December 2016, a 20 percent increase in time (Figure 6). Compared with the pre-GR era, Dallas homebuyers now also wait one more week to get the keys for their purchased home.

Dallas’ DTS was trending upward before the GR, reaching 115 days in December 2010. Since then it has decreased, reaching 71 days in December 2016 (Figure 7).

The percentage of time spent closing the transaction in Dallas was less than 30 percent before 2011. In December 2016, it reached more than 50 percent—so, shorter absolute days but longer percentage of time in closing. Favorable market conditions shortened the DOM, but regulations lengthened the DTC (Figure 8).

Mortgage Borrowers Be Prepared

Maybe waiting one more week to close a homebuying transaction is not important for some buyers, but if it is important, gathering documents showing incomes, expenses, credit history, and so on can help homebuyers minimize the days needed to close.

So what does this all mean? First, it is clear that the regulations introduced with Dodd-Frank have had a measurable impact on time taken to close a home purchase. The extra safety checks created to protect buyers and prevent another financial crisis have extended the time for transactions in Dallas and Houston to close by one week.

Second, the significant decline in DOM in Dallas and Houston reflects the urgent shortage of housing supply in Texas. While the national economy struggled to recover after the GR, the Texas economy expanded strongly, creating new jobs and attracting millions of new residents to the state.

The Dodd-Frank regulations also tightened lending conditions for builders and construction loans, leading to lower supplies of new homes. The net result is a historically low housing inventory and rapidly rising prices, threatening the affordability of housing in Texas.

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Dr. Anari (m-anari@tamu.edu) is a research economist and Klassen (gklassen@mays.tamu.edu) a research data scientist with the Real Estate Center at Texas A&M University. 

Outlook for the Texas Economy

Outlook for the Texas Economy

 May 2017 Summary1

The Texas economy advanced amid increased energy activity and a strong labor market. Oil production and the number of active rigs in Texas increased, stimulating 6,600 new mining and logging jobs despite the price of oil falling to its lowest point this year. Single-family housing and nonresidential construction across the state supported higher construction values and created 3,400 construction jobs. These gains dragged down the statewide unemployment rate and sparked hourly wage increases. Overall the Texas economy remained robust, but trade uncertainty (especially with Mexico), volatile energy prices, and tax policy uncertainty present potential headwinds.

The Texas Business Cycle Index (a measure of current economic activity in the state) increased 3.7 percent year-over-year, indicating continued economic expansion. The major metro Business Cycle Indices indicated similar year-over-year growth throughout the Texas Urban Triangle. Economic activity accelerated for the fifth straight month in Houston, solidifying its recent economic recovery. The Dallas and Fort Worth indices posted the strongest growth, increasing at a quarterly annualized rate of 3.7 percent and 3.3 percent, respectively.

The Texas Leading Economic Index (a measure of future directional changes in the business cycle) flattened but maintained positive year-over-year growth. The overall health of the Texas economy balanced the index against falling oil prices. The Texas Consumer Confidence Index declined by over 8.0 percent for the second consecutive month, eliminating all of its post-election gains. Stagnant wages weighed on Texans’ confidence, but have hardly impacted consumption spending.

Multiple components generated interest rate fluctuations in May. In the beginning of the month, European political anxiety waned, elevating the ten-year U.S. Treasury bond yield to a peak of 2.42 percent. However, tensions in Washington offset this increase and dragged the yield to a monthly average of 2.3 percent. The Federal Home Loan Mortgage Corporation 30-year fixed-rate fell to 4.0 percent, despite the Fed’s 25-basis-point increase in the federal funds rate. Lower interest rates could ignite stronger demand and simultaneously stimulate residential construction.

Texas housing sales increased 8.7 percent (seasonally adjusted) after dipping last month. Current construction activity, measured by the Residential Business Cycle (Coincident) Index, was steady as construction worker wages and employment increased. The Residential Construction Leading Index (RCLI) flattened after large increases earlier this year, indicating a stabilization at the current level of activity. (For additional housing commentary and statistics, see Texas Housing Insight at recenter.tamu.edu)

The average West Texas Intermediate crude oil spot price fell to a nonseasonally adjusted six-month low of $48.48 despite OPEC’s extended production cuts. Booming U.S. production continued to offset OPEC’s market rebalancing measures. The number of active rigs in Texas increased 153.1 percent year-over-year to 4532 and crude oil productionrose above 3.3 million bpd23. The Henry Hub spot price of natural gas rose to $3.2 per million BTU2 (British Thermal Unit) despite saturated inventories. Increased oil drilling, which produces natural gas as a byproduct, contributed to a global natural gas glut. The Energy Information Administration predicts that the U.S. will be a net exporter of natural gas by 2018—the first time in nearly 60 years. Texas remained the largest gas-producing state, accounting for 23.7 percent of national production.

Texas monthly nonfarm employment added 14,800 jobs and kept pace to reach the Dallas Fed’s 2017 forecast of 289,300 new jobs. The statewide unemployment rate fell from 5.0 percent to 4.8 percent, but at the expense of a labor force contraction. The statewide labor force participation rate fell for the first time this year, dropping to 63.9 percent, but maintained positive year-over-year growth. Despite this blip, the number of initial unemployment insurance claimsremained at pre-recessionary levels, reinforcing the labor market’s strength.

The unemployment rate fell in every major Texas MSA for the second straight month. Austin boasted the lowest rate at 3.4 percent, followed by San Antonio at 3.9 percent. Dallas and Fort Worth both settled at 4.0 percent, while Houston experienced a 3 point drop to 5.4 percent. This downward trend, concurrent with recent employment growth, indicates labor force expansions throughout the major metros.

Dallas and Fort Worth led employment growth, adding 13,700 and 5,200 jobs, respectively. The number of jobs was unchanged in Austin and fell by 100 in San Antonio. Houston employment growth rose for the ninth consecutive month, supported primarily by an upswing in manufacturing and leisure/hospitality industries. Houston added over 37,000 jobs year-to-date, more than doubling the 2016 annual increase.

The goods-producing sector accounted for 80 percent of Texas nonfarm employment growth. The mining and logging subsector led the charge with 6,600 new jobs, while manufacturing posted a 1,800 job increase. The manufacturing employment percentage surged in Houston and Austin, reaching double-digit annualized growth quarter-over-quarter. The Texas Manufacturing Outlook Survey’s corroborated the industry expansion, as the production index hit a 3-year high. The hours worked and wage indices jumped 9.8 percent and 5.5 percent, respectively, and expectations soared even higher.

Construction activity accelerated, generating nearly a quarter of May’s nonfarm employment growth. Statewide construction values rose 11.5 percent on a three-month moving average (3MMA) as single-family and non-residential construction advanced. Population growth stimulated construction activity as new hospitals in Austin, Dallas, and San Antonio drove up construction values. Dallas benefitted from major investments in two-family housing and steady growth in single-family residential construction. In Houston, major increases in retail, warehouses and office buildings elevated construction values.

In Texas, the services-providing sector returned to flat growth, ticking up less than a tenth of a percent. The financial sector added 3,000 jobs, led by gains in Houston and Austin, but statewide declines in education and health care negated most of the growth. In contrast, the Texas Service Sector Outlook Survey was increasingly optimistic. Increased sales activity elevated the employment and wage indices, but respondents noted frustrations regarding burdensome taxes and regulations impeding potential growth.

Retailers expressed less optimism in Texas Retail Outlook as the retail sales and business activity indices decelerated. The employment and hours worked indices dipped below 0 and part-time employment increased, suggesting business could be slowing. The hard data confirm retail labor market struggles, where over 18,000 jobs were lost statewide since February. However, decreased optimism contradicts the steady upward trend in actual retail sales4.

Despite low levels of unemployment, Texas real personal income per capita contracted 0.4 percent year-over-year, falling further behind the national level. However, recent increases in wages and salaries, particularly in energy related industries, suggest a possible convergence. Total private employee hourly earnings in Texas rose 2.9 percent year-to-date and showed no signs of slowing. Wage growth was apparent in San Antonio, where hourly earnings increased 2.0 percent from last year, while Austin posted 1.0 percent year-over-year growth. Only recently have earnings picked up in Dallas, where the hourly rate increased 2.8 percent since February. Despite strong employment growth, falling wages continued to plague the Houston and Fort Worth economies, where hourly earnings declined 1.8 percent and 2.2 percent year-over-year, respectively.

Texas manufacturing jobs paid an 11.2 percent premium in hourly earnings relative to the national average. Fort Worth had the highest manufacturing wages, paying 65.6 percent and 49.0 percent more than the national and statewide averages, respectively. Manufacturing earnings surged in San Antonio, where the hourly wage increased 18.0 percent from last year, but remained 8.4 percent below the Texas average.

The U.S. Consumer Price Index (CPI) fell below the Fed’s 2.0 percent benchmark amid a 6.4 percent drop in gasoline prices. The core inflation rate, which excludes the often-volatile energy and food sectors, rose marginally at 0.1 percent. The CPI for Dallas fell to 2.1 percent as food, beverage, and apparel prices offset transportation and housing price inflation. The Federal Reserve considered falling prices to be transitory and remained on track to further raise the federal funds rate.

The real goods trade deficit decreased 1.6 percent as U.S. commodity export growth outpaced import growth by $1.0 billion. Total Texas commodity and manufacturing exports increased 2.5 percent and 4.0 percent, respectively, led by computer and electronic product sales. The Texas trade-weighted value of the dollar5 fell 5.1 percent year-to-date, providing favorable export conditions. Mexico remained Texas’ main trading partner, accounting for 36.4 percent of Texas exports year-to-date.

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1All monthly measurements are calculated using seasonally adjusted data, and percentage changes are calculated month-over-month, unless stated otherwise.

2Non-seasonally adjusted.

3Crude oil production data lag this report by one month.

4The Federal Reserve Bank of Dallas seasonally adjusts Texas nominal retail sales data and the data release typically lags the Outlook for the Texas Economy by one month. The series is converted into real terms using the Consumer Price Index.

5The Texas trade-weighted value of the dollar is generated by the Federal Reserve Bank of Dallas. Its release typically lags the Outlook for the Texas Economy by one month.

Texas small land sales jump 14 percent, price per acre declines in 2016

CONTACT:
Danielle Urban
Pierpont Communications
512-448-4950

 

Texas small land sales jump 14 percent, price per acre declines in 2016

Texas Association of REALTORS® releases latest edition of Texas Small Land Sales Report

 

June 23, 2017—AUSTIN—Texas small land sales volume experienced strong gains in 2016, while the average price per acre declined slightly statewide, according to the Texas Small Land Sales Report released today by the Texas Association of Realtors.

“As our state’s population continues to grow and the footprints of Texas cities expand, the demand for rural land will only increase,” said Vicki Fullerton, chairman of the Texas Association of Realtors. “At the same time, after consecutive years of rapid growth in real estate land prices, prices in many regions have leveled off.”

Texas small land sales volume jumped 14.2 percent annually to 6,992 small land tracts sold in 2016. During the same time frame, the average price per acre dipped 0.3 percent year-over-year to $5,647 an acre. The definition of a “small” land sale varies from region to region but generally is considered to be a land purchase of 200 acres or less. The exception is Far West Texas, where 500 to 8,000 acres qualifies as a small land sale.

Strong small land sales growth was evident throughout most regions, with small land purchases in Far West Texas, Northeast Texas and the Austin-Waco-Hill Country experiencing annual gains of more than 20 percent. Conversely, small land sales in West Texas declined 20.6 percent from 2015.

As demand for small land tracts continued to rise, the average tract size of Texas land purchased declined. In 2016, the average tract size for Texas small land purchases declined three acres from 2015 to 36 acres. Far West Texas and South Texas were the only regions that experienced declines in average price per acre, falling 64.9 percent and 3.9 percent, respectively.

Charles Gilliland, economist with the Real Estate Center at Texas A&M University, commented: “While the Texas land market remains strong, multiple factors are impacting land sales activity throughout the state. Rising prices of irrigated farmland and a sluggish agricultural sector are driving up land costs in the Panhandle, and residual effects of the oil and gas downturn have slowed small land sales activity in West and South Texas. Statewide, shortages in prime land are stifling land price growth as developers consider less desirable land tracts.”

Fullerton concluded: “The wise utilization of Texas land is the bedrock of our state’s economy and quality of life. As Texas continues to experience rapid population growth, it’s important that leaders across our state and within our communities take care to ensure that ongoing land segmentation and development preserves the unique culture of our state’s regions and does not harm essential industries.”

About the Texas Small Land Sales Report
The Texas Small Land Sales Report analyzes small land sales data and trends across seven regions of Texas utilizing survey data aggregated by the Real Estate Center at Texas A&M University. The Texas Association of REALTORS® distributes insights about the Texas housing market each month, including quarterly market statistics, trends among homebuyers and sellers, luxury home sales, international trends, and more.

About the Texas Association of REALTORS®
With more than 110,000 members, the Texas Association of REALTORS® is a professional membership organization that represents all aspects of real estate in Texas. We advocate on behalf of Texas REALTORS® and private-property owners to keep homeownership affordable, protect private-property rights, and promote public policies that benefit homeowners.

First-time homebuyers? Look to No. 8 ranked San Antonio

First-time homebuyers? Look to No. 8 ranked San Antonio

Real Estate Center – Texas A&M

SAN ANTONIO – According to new data from SmartAsset, The Alamo City is the eighth best city in the nation for first-time homebuyers.

Despite its booming housing market, San Antonio still remains highly affordable with a price per sf of $80.50.
San Antonio shares a place among the top ten with a few other cities in Texas: Houston finished at No. 5 while Dallas and Fort Worth tied at No. 10.
SmartAsset came up with their rankings by examining cities with a population of at least 300,000 and considering key metrics reflective of mortgage accessibility, affordability and stability in each market.
Other Texas cities made the top 20 include Arlington at No. 13, Corpus Christi at No. 17 and Austin ranking No. 20.
San Antonio’s housing market has been strong over the past several years.
According to Federal Housing Finance Agency data, prices for San Antonio’s housing market increased 8 percent from third quarter 2014 to third quarter 2015.
The Alamo City had a loan funding rate of 62 percent—third best among the top 25 cities on the list.

10 Quick Home Maintenance Tips

10 Quick Home Maintenance Tips
Excerpted from the Popular Mechanics book When Duct Tape Just Isn’t Enough, published by Hearst Books/Sterling Publishing.

Home maintenance isn’t restricted to repairs. In fact, certain tasks–when performed regularly–may actually prevent things from breaking in the first place. But when things do go wrong (and it’s inevitable that they do), we have some backup plans that you can try before you grab the phone to call for pro. Appliances and plumbing are the most frequent offenders, but they also often can be the simplest to care for. From the gutters to the living room carpet, there’s a reliable method for keeping every part of your home clean, safe, and well maintained.
MUST-DO MAINTENANCE:
The quickest fix is to not have the problem in the first place. Here’s a checklist of items every homeowner should get to regularly.

1. Test your garage door opener monthly to ensure that it reverses when it hits an obstruction or when its sensor beam is interrupted.

2. Vacuum the clothes dryer’s exhaust duct at least once a year. If the duct is plastic, replace it (it’s a fire hazard). Rigid sheet-metal ducting is best.

3. Replace furnace filters quarterly, or as recommended by the furnace manufacturer.

4. Test all GFCI (ground fault circuit interrupter) outlets monthly. Press the test button and use a voltage tester to make sure the power goes off.

5. Clean leaves and debris from the condenser of a central air conditioner seasonally.

6. Once a year, vacuum the refrigerator coils underneath the appliance.

7. Have the fireplace chimney inspected and cleaned annually.

8. Inspect window and door caulking and weather stripping yearly.

9. Replace the batteries in smoke detectors yearly. And remember, even recent hard-wired smoke detectors have backup batteries that must be replaced. If you have never checked yours, do so.

2:23 || GUTTERLY SIMPLE:
Cleaning your gutters is the chore you abhor.

THE QUICK FIX

Make gutter cleaning easier–and safer (no ladder required)–with a long spray wand made from a 1/2-in.-diameter by 10-ft.-long PVC pipe. Cut two 6-in. lengths of pipe. Then use PVC cement to join these short sections and two 90-degree elbows with what is now a 9-ft.-long pipe, forming a J-shaped hook. At the short end of the hook, glue on a solid endcap. Drill three 1/8-in.- diameter holes in the cap. Glue a threaded adapter onto the opposite end of the pipe and attach a garden hose. Place the short end of the J-shaped hook inside the gutter and turn on the hose. As you walk along the house, high-pressure streams of water will rinse the gutter clean.

Investing? ‘Best Buy’ lists San Antonio, Dallas, Austin

Investing? ‘Best Buy’ lists San Antonio, Dallas, Austin

Texas A&M Real Estate Center

TEXAS Ya’ll come! – Looking to make a big investment in 2016? According to Forbes, you’re in the right place.

Texas is the state with the second-greatest number of cities on the Best Buy list,

San Antonio (No. 3), where homes average $201,000;

—Dallas (No. 6), where home prices average $211,000; and

Austin (No. 7), $281,000.

While the rest of the country was in the depths of the recession, Texas experienced only a shallow one, and bounced back with force.

The energy boom helped fuel job growth; even with gas prices now way down and the industry hemorrhaging some 200,000 jobs, these three Texas metros are doing well overall thanks to their diversified economies.

The Gulf Coast  has welcomed a boom in petrochemical construction, and the state is seeing growth in leisure and hospitality, both activities reportedly fueled by lower gas prices.

Austin is welcoming growth in high tech.

Dallas is welcoming the relocation of Toyota, State Farm Insurance, and Liberty Mutual Insurance.

San Antonio has financial firms and data centers.

Winzer predicts that it will still be a while before Texas prices reach the point where these metro areas are no longer a good investment—by his estimate, when they are overpriced by about 20%

Year-over-year job growth is strong (San Antonio: 3.7%; Dallas: 3.5%; Austin: 3.3%) and people continue to move to the Lone Star State (three-year growth rates for San Antonio: 6.1%; Dallas: 6.2%; Austin: 9%), meaning it is an area flush with a pool of renters. Housing prices are rising but compared to the rest of the nation, still relatively cheap.