San Antonio’s housing market grew even hotter amid July’s sweltering temperatures, demonstrating the strength of the local economy but posing a threat to aspiring middle-class homeowners.
Local population and job growth continued to drive up sales last month: 3,275 homes were sold in the San Antonio-New Braunfels metro area, an increase of 11% over July 2017, according to data from the San Antonio Board of Realtors.
Yet home prices also soared, a trend that is of increasing concern to Mayor Ron Nirenberg and other local officials. The median price of a home rose 5%, to $229,800, a rate of increase typical for the local market since it emerged from the housing crisis in 2012.
Over longer spans of time, those single-digit price increases add up: In July 2012, the median local price was $164,700, nearly 40% lower than last month.
The supply of homes on the market remains tight as construction firms struggle to build homes in the moderate price range that local residents can afford — a problem that plagues major cities across the U.S. The National Association of Realtors reported last week that a "staggeringly low" inventory of homes had pushed the national median price up to $269,000 in the second quarter of this year, 5.3% above the same time in 2017.
The rising costs of land, labor and regulatory fees are causing local prices to swell, said Jack Inselmann, an economist with Metrostudy who analyzes the local market. Tariffs on lumber from Canada put in place by the Trump administration have also contributed to price growth, he said.
"The only time it will change is when we hit a peak and then this market works its way through a downcycle," Inselmann said. "Once it does that, we'll reset on our supply and demand and see where things stand. It's been very tight the last few years, and it will remain tight at least the next 12 to 24 months."
The local area's inventory of available homes, a closely watched statistic that measures the average time it takes for a home to be sold if no new homes are listed, was 3.7 months in July. That is extremely low by historical standards — an inventory of six months indicates a balance between buyers and sellers — and even tighter than in July of last year, when the measure was at 3.9 months.
The inventory has risen steadily from the record low of 3.1 months reached in December, but it is typical for the market to loosen up temporarily during summer months, Inselmann said.
"By winter again it will go back down to around three months of supply," Inselmann said.
The local market is on track to set another sales record this year after a record 30,719 homes were sold in 2017. Between January and July, 19,314 homes were sold in the metro area, which is 7.5% higher than at the same time in 2017, according to SABOR's data.
Mortgage interest rates have leveled off since April after rising for six months to their highest level in four years. The national average for a 30-year fixed-rate mortgage was 4.59% last week, up from 3.8% in September, according to Freddie Mac.
Mortgage rates remain below historical norms; they were higher than 6 percent for much of the 2000s and above 9% for much of the '80s and '90s.
Nationwide sales of existing homes — in other words, homes that aren't new construction — decreased 2.4% in the second quarter of this year compared to the same time in 2017, according to the NAR.
Housing demand is "very strong," but the tight supply of homes on the market is crimping sales nationwide, the NAR's chief economist Lawrence Yun said in a news release.
"The ongoing supply crunch affecting much of the country worsened for most of the second quarter, as the growing number of interested buyers in many markets overwhelmed what was already a meager level of available listings," he said. "With not enough homes for sale, multiple bids caused prices to rise briskly and further out of the reach of some prospective buyers."
Yet the worst of the nationwide supply crunch might have passed, Yun said. In June, the inventory of existing homes in the U.S. rose for the first time in three years, albeit slightly. At the end of June, 1.95 million existing homes were up for sale, 0.5% above a year earlier, according to the NAR.
The affordability crisis is especially severe on the West Coast, the NAR's data show. Two housing markets in the U.S. now have median prices above $1 million: the San Jose, Calif., metro area, with $1.4 million, and the San Francisco-Oakland metro, with just under $1.1 million.
