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Texas Real Estate Research Center economist says housing frenzy is slowing

After a period of high sales following the economic shutdown caused by the COVID-19 pandemic, the housing market appears to be slowing a bit.

AUSTIN, Texas — The Texas housing market may be slowing now following an explosive sales period after the COVID-19 pandemic slowed the economy in 2020, according to one research economist.

Luis Torres with the Texas Real Estate Research Center said market indicators, like housing sales and price growth, have peaked and are slowing, while months of inventory, listings and days on market reached a low and are now beginning to rise.

"Texas housing sales accelerated after the pandemic shut down the economy in March and April of 2020," Torres said. "This caused the already depleted inventory of homes for sale to reach historic low levels and led to exuberant home price growth."

He attributes the housing market performance to lowered mortgage rates, an increase in home-purchasing preferences, homebuyers not being affected by the pandemic and federal government transfer payments and student loan payment deferral.

"Texas' single-family home sales peaked at the start of 2021," Torres said. "That's when San Antonio home sales were highest. Austin, Dallas-Fort Worth, and Houston recorded their highest number of housing sales in the last quarter of 2020."

However, he also noted housing sales numbers were hindered by the lack of homes available for sale, potentially indicating that sales are not a good sole indicator showing when the housing market started to slow.

Months of inventory for the state and its major areas hit bottom in May, according to the Texas Real Estate Research Center. The same is true for active listings, except San Antonio, which recorded its low in April.

Torres said new and pending listings reached a trough in February after Winter Storm Uri's impact on the Texas economy. Since then, the overall trend for both new and pending listings shows the supply of homes for sale continues to grow, he said.

According to the Texas Real Estate Research Center's 2021 mid-year Texas housing and economic outlook released in August, new-home construction is projected to grow in 2022 as the pandemic housing market dissipates and the market stabilizes and sets on a sustainable long-run path. However, the report adds that growth will be at a slower rate than in the past two years.

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