The U.S. housing market has been on a roll lately as it continues to bolster the overall economy during the slow but steady recovery.
Metrostudy, a residential real estate research company, recently released its second quarter 2015 Home Building Outlook, which found 1.07 million new houses are expected to break ground this year. Single-family housing starts should account for 691,000 of this total, while multi-family home starts will rise to 379,000.
"The U.S. housing market continues to gradually expand," Brad Hunter, chief economist of Metrostudy, said. "While some in our industry are eager to see more rapid growth, a steady and sustainable rate of increase will be beneficial in the long run. Demand factors should continue to improve, and as rising rents eventually hit the pain point, more people will begin to consider home ownership."
Metrostudy crunched data from more than 100 core-based statistical areas and found move-ins increased 9 percent in the second quarter compared with Q2 2014, and new housing starts jumped 11 percent over the same time period. According to the study, economists expect national new home sales to surge 22.4 percent year over year. If this number holds steady, it will represent an increase of last year's total of 437,000 to 535,000.
Rents continue to rise throughout the country, with CoStar reporting a surge in the number of renters nationally, now close to 43 million people. As more people continue to rent, they will continue to drive up rental rates until eventually it makes more fiscal sense for people to purchase a home rather than rent.
Texas leading the pack
With so much excitement surrounding the U.S. housing market, it should come as no surprise that Texas real estate is leading the pack as the state's housing market continues to sizzle throughout the summer.
"Texas's housing market continues to sizzle throughout the summer."
While there are bumps in the road for the energy sector from the declining price of oil, these setbacks have yet to materialize in the state. While the Federal Reserve Bank of Dallas predicted Texas job growth would decline between 1 and 2 percent from its 3.4 percent growth rate last year, this message has failed to resonate with the Texas housing market.
A string of recent studies have indicated just how hot this market is. Riding on the heels of WalletHub's healthiest housing markets report recently released, the Metrostudy study found that the best overall new housing markets include Austin and San Antonio both in terms of health and the forecast of local new home sales.
In addition to the Wallethub and Metrostudy studies comes another report by realtor.com, which shows four Texas cities landing in the top 20 hottest markets in the country, which obtained an "Advance Read of July Trends."
Among the areas surveyed, Dallas-Fort Worth-Arlington bumped up from fifth to third place from June to July. Midland, Texas, jumped from 17th to seventh, illustrating just how strong the housing market is in this booming state. Meanwhile the Austin-Round Rock area inched up to 16th place from its previous spot at 18, while San Antonio-New Braunfels held steady in the No. 19 spot.
Despite reports continuing to come back with mixed data - some are cheering a rise in existing home sales while others are lamenting that pending home sales are down month over month but up year over year - Jonathan Smoke, chief economist at realtor.com, stated their data is solid and reflects a variety of metrics.
"We have reviewed the data and taking into account less than perfect seasonal adjustment techniques at a very seasonal time for housing and the differing baseline metrics used in the various indicators, we're comfortable that the market remains strong despite of these recent mixed signals," said Smoke.
The Texas housing market continues to deliver for homebuilders.
According to realtor.com's data, Austin-Round Rock saw home prices increase 10.2 percent compared to the second quarter of 2014, while the number of single family homes sold rose 1.9 percent. San Antonio-New Braunfels experienced a 7.3 percent rise in median home prices over the same time period, with the number of single family homes sold increasing by 14.3 percent.
Jim Gaines, economist with the Real Estate Center at Texas A&M University, believes the housing market will remain strong in the state for a while, even with powerful headwinds from the oil sector, HousingWire reported.
"Despite expected negative impacts from the decline in the oil price and rig counts, both existing housing development and new single-family home sales continue to be strong," said Gaines. "While a down oil and gas market makes it difficult to forecast Texas real estate for the rest of the year, preliminary numbers indicate a positive third quarter of 2015. Additionally, the expectation of rising interest rates in the near future could be stimulating demand as well."
Home prices continue to beat estimates as the sale of homes in Texas grew 46.3 percent from the first to second quarter of 2015 and bumped up 4.7 percent year over year to reach 88,906 homes sold, according to the Texas Association of Realtors. According to Scott Kesner, chairman of the association, the Texas housing market is enduring despite changing economic conditions in the state.
"The impact of lower oil prices continues to be delayed, leading to a surprisingly strong second quarter," Kesner said. "In fact, Texas home sales are actually stronger than they were this time last year, when oil prices were nearly $100 a barrel. This is further evidence of the strong and enduring demand for Texas real estate."
Compared to the second quarter of 2014, the median price for a home in Texas grew 8.1 percent to reach $200,000 with the average price rising 9 percent to $258,786. This marks the first time homes in Texas have reached a median price of at least $200,000 while home prices have hit an all-time high.
Housing starts are expected to surpass last year's numbers.