Mine K. Yucel, SVP and director of research of the Federal Reserve Bank of Dallas (the Dallas Fed), provided an overview concerning the status of the residential housing sector and the Texas employment situation titled “Texas Economic Update: August 2014.”
“The Texas economy grew during the first half of 2014,” Yucel said. “From January 1 through the end of June, Texas employment has grown 3.3 percent, which is better than the national average.”
During at period, Texas added 187,000 new jobs, according to Yucel. The Lone Star State’s unemployment rate at the end of June was 5.1 percent, which was the lowest rate since August 2008.
Employment growth was relatively broad-based across all sectors, according to Yucel with professional business services; trade, and utilities expanding the most. For example, the professional business sector gained 8,500 jobs in June and the trade sector added 8,100 jobs during the same period. In contrast, the construction sector showed weakness and lost approximately 1,800 jobs in June.
Yucel emphasized that Texas residential construction activity exhibits a mixed picture. “Texas residential housing starts dipped 5 percent in June from the month before. However, overall they are 25 percent higher than a year ago,” she said.
Analysts note that tight lot supplies, higher construction costs, and labor shortages have limited growth in the Texas housing starts and, consequently, have extended delivery times, according to Yucel.
“Multi-family permits declined in June after rising slightly in May. Overall, however, multi-family permits have been rising very steadily during the past year and are now at a level higher than before the recession,” she said.
Likewise, single-family permits have been on an upward trend for quite some time. They have moved up 1.6 percent in June and are up 8 percent during the past 12 months, according to Yucel.
“The median sales price of a home in Texas moved up to $182,000 in June,” she said. “This combined with healthy sales activity and a very low three-and-a-half month supply of inventory suggests that we should see continued growth in residential construction activity.”
Overall, the Dallas Fed forecasts 3.5 percent increase in Texas employment numbers in 2014, which translates into nearly 400,000 new jobs, Yucel said.