As COVID-19 and lower energy prices impacted the state’s economy, the number of home sales across Texas declined in the second quarter of 2020 while median prices increased.
Compared to the second quarter last year, Dallas-Fort Worth-Arlington home sales decreased 11.5% to 26,290 single-family home sales, while median price increased 2.3% to $286,494.
“Even though Texans entered Q2 in the jaws of COVID-19, the housing market held its own,” said Cindi Bulla, chairman of Texas Realtors, commenting on data released in the 2020-Q2 Texas Quarterly Housing Report released July 22.
“The second quarter of 2020 fared amazingly well by comparison to the same period of 2019, which was arguably one of our best years ever. Gov. (Greg) Abbott’s early declaration of real estate as an essential service allowed Texas Realtors to transition to virtual platforms and carefully choreographed safety protocols for the few necessary in-person contacts, virtually eliminating disruption to the real estate sector,” Bulla said.
Home sales declined 9.9%, with 91,970 homes sold in the second quarter of 2020. Statewide, the median price increased 2.9% to $252,000. Of all the homes sold within the second quarter, 34.6% were priced from $200,000 to $299,999, the highest share of sales among all price-class distributions.
But the increase in COVID-19 cases may impact the residential real estate market in the state, according to housing experts for the Real Estate Center at Texas A&M University.
While existing homes sold in June through Texas Multiple Listing Services (MLSs) surpassed 29,000 for the first time since August 2019, that trend may not last, officials there say.
“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 bolstered demand for first-time homebuyers, which accounted for 35 percent 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.