The Austin area housing market remains one of the healthiest in the nation, even as it grapples with affordability challenges and an undersupply of housing, a national economist said Wednesday.
Lawrence Yun, chief economist for the National Association of Realtors, spoke at the annual membership meeting of the Austin Board of Realtors, which represents about 13,000 real estate professionals in Central Texas.
“Austin has had one of the fastest job growth rates in the country over the past decade and consequently one of the strongest housing markets with rising sales,” Yun said. But a shortage of housing inventory continues to plague the market, which has resulted in a run-up in home prices that have tripled since 1995, he said.
“Some buyers are priced out,” Yun said. “You need more supply to tame price growth.”
Yun said builders need to ramp up production; otherwise, job growth could stall as employees who are forced to the suburbs to find attainable housing decide to ditch the longer commutes and seek jobs elsewhere.
The Austin area has a three-month supply of housing, making it a seller’s market. Experts consider a supply of 6- to 6 1/2-months to be a balanced market, tipped in favor of neither buyers or sellers.
The shortage of housing is an issue in other Texas markets and nationally as well, Yun said. Inventory is well under historical averages and the shortage is one of the constraints holding back growth potential in the housing market overall, Yun said.
Rising lumber prices, lending constraints and labor shortages are among the factors limiting new-home production across the country, Yun said.
Eldon Rude, a housing market consultant and principal of Austin-based 360 Real Estate Analytics, said that in recent conversations with his homebuilder clients,” their biggest challenges continue to be finding enough lots in desirable locations to build on, and securing the labor force needed to complete their homes.”
Looking ahead, Yun’s forecast calls for the Austin area to end 2017 with home sales higher than last year. In 2016, both sales and prices in Central Texas hit yet another record for the sixth consecutive year.
Based on recent past job creation, sales in 2018 should continue to modestly increase, Yun said, “but home sales in 2019 will depend critically on inventory availability.”