Year-over-year job growth in Austin remains well above the national average after peaking in June 2013. Payroll jobs grew by 12,600 in the first half of 2014 compared to 18,100 in the same period last year. Despite the softer job growth, Austin’s economy continues to be strong, mainly fueled by tech-and-services sector growth. Consequently, the unemployment rate dropped to 4.1 percent by June this year, about 1.2 percent down from last June. We expect job growth to be around 3.5 percent year-over-year through 2014 as the region still maintains a strong pro-business environment.
Austin saw a strong rebound in housing starts in the second quarter of 2014 with a surge in both single and multifamily housing starts. Strong in-migration and consequent population growth are keeping residential real estate markets tight. We expect housing starts to moderate in the next half of 2014 before rebounding again in 2015. Home price appreciation started moderating in 2014Q1 after peaking in the second half of last year. Home prices are expected to grow above the national average in the remainder of 2014 and 2015 as residential housing demand continues to pick up.
We expect continued job growth in forthcoming months fueled by expanding businesses and entrepreneurial activity in the area. Charles Schwab from San Francisco is planning to add over 800 jobs in Austin over the next several years. Austin approved a $3.3 million tax incentive to the company. Expanding grocery stores like Trader Joe’s, Whole Foods Market, and Sprouts are not only adding new jobs to the region’s economy, but also providing diversified products to customers. Despite the strong regional economy, poverty in the region remains a major challenge for economic development. According to the U.S. Census Bureau, about 19.4 percent of the population lives in poverty in the area compared to 17.4 percent in the entire state of Texas.
Click here for the complete Austin MSA Regional Economic Update: Austin 2014Q2.