The number of home sales increased in the first quarter of 2020, along with median home prices, according to a report released by Texas REALTORS® in April. Although this bodes well for the state’s housing market, concerns about the COVID-19 pandemic have industry experts concerned that the second quarter may not show continued growth.
The 2020 Q-1 Texas Quarterly Housing Report, released April 22, a total of 75,052 homes were sold in the Lone Star State. This is a 7% annual gain from the first quarter of 2019. Across the state, median home prices also increased, jumping 5.1% from a year ago to $241,500.
The report includes the beginning stages of the COVID-19 pandemic, but Texas REALTORS® explains that the next report will show a more accurate statistical representation of the impact the virus has had on the Texas real estate market.
“The housing statistics for the first three months of the year show the continuation of more than a decade of growth in the Texas housing market,” said Cindi Bulla, chairman of Texas REALTORS®. “However, the rapid growth of the global pandemic we are facing is poised to affect this momentum. Before this unprecedented event and the economic downturn and shelter-in-place orders, our biggest market concern was the lack of affordable housing to meet the tremendous demand.”
According to the latest stats, affordable housing continues to be an issue Texas home buyers are facing. The report showed that 33.8% of homes sold in Texas were in the $200,000-$299,000 range. This was the largest portion of homes sold across the state.
Higher home prices are not unique to Texas, as the nationwide price median sat at $320,000 in March, according to a REALTOR.com report released April 2. Although home prices are trending higher, the rate of appreciation for most real estate remains sluggish.
“This marks an interesting point in housing pricing trends,” writes Dave Ramsey, popular financial expert. “While that price is a new record high compared to any previous March (woo-hoo!), the end of the month marked the slowest rate of growth (2.5%) since 2013.”
COVID-19 Contributing to Housing Shortage
Jim Gaines, Ph.D., chief economist with the Real Estate Center at Texas A&M University, commented, “Sales activity in the first quarter experienced strong momentum. However, as a result of COVID-19, many sellers have begun pulling their listings to wait out the quarantine. This will only add to our housing shortage and strained inventory availability. Sales are anticipated to drastically drop in Q2, as we’ll be comparing our market to the previous record-breaking year. In the long-term, there will be continued demand within the Texas housing market as long as the job market is able to rebound quickly.”
Active listings diminished by 8.9% to 91,363 listings in the first quarter of 2020. Texas homes spent an average of 67 days on the market during the same time frame, one day more than the first quarter of 2019. Housing inventory in Texas decreased 0.5 months from 2019-Q1 to 3.0 months of inventory.
Chairman Bulla concluded in the report, “While these statistics will serve as an important historical reference and benchmark for future recovery, they don’t represent the full market impact of COVID-19. The data for the second and third quarter of 2020 will be the market story, giving us a better look at the post-crisis implications on the Texas housing market. The good news is we went into the disruption with positive velocity and will be ready to come out the other side with a swift recovery. In the meantime, opportunities are everywhere, and we Texans always outperform expectations.”