The Houston metro area is enjoying high employment growth. Houston payroll employment grew 3.8 percent year over year in Q2, which is more than double the growth of the U.S. of 1.6 percent. The unemployment rate increased slightly to 6.3 percent in Q2, yet remains far below the national average of 7.6 percent. Houston July payroll employment increased by approximately 11,700. The Dallas Federal Reserve’s August surveys of Texas business executives reported positive growth in the service sector, retail sales and manufacturing, indicating a positive outlook for job growth in Q3.
Tight housing markets have moved Houston home prices to new highs. Historically, Houston housing supply kept up with housing demand allowing for relatively stable home prices, even through the Great Recession of 2007. Yet in 2013Q2, FHFA Purchase-Only Home Price Index reached an all-time high of 237.5. The 11.1 percent year over year increase in home value indicated that housing supply was no longer keeping up with housing demand. A report released by the Wall Street Journal cited issues with developing raw land as a contributor to the tight supply of single-family housing.
Consumer credit quality continued to improve. Houston area personal bankruptcies were down 12 percent year over year in Q1. The increase in credit quality coincides with a large boost in homeowner equity which will assist consumer retail sales.
The price of NYMEX crude oil remains elevated at $107.33 per barrel as of September 4th. Given the uncertainty of a possible U.S. and NATO strike on Syria, crude oil prices are expected to remain high in the near term. High oil prices remain a support to the Houston economy.
Click here for the complete Houston MSA Regional Economic Update: Houston 2013Q2.