The Austin metropolitan area has been consistently outperforming the state of Texas in terms of private sector job growth after the Great Recession of 2008/2009. So far Austin’s year-over-year nonfarm payroll job growth has been above 3.0 percent for most of 2015. As energy prices declined and many energy-dependent Texas regions continued to struggle, Austin added more than 12,230 jobs in the second quarter of 2015, which is more than 80 percent of nonfarm jobs created in the entire state of Texas in the period. As a result the unemployment rate fell to 3.1 percent by July 2015. This indicates Austin’s economic climate is still strong, diverse and vibrant, mostly driven by the services sector. We expect Austin’s job growth to remain in the range of three to four percent in 2016 and 2017.
Consistent with strong job growth, personal income in the Austin area has grown faster than the overall state of Texas since 2008. After a robust increase in 2011 and 2012, year-over-year growth in income trended downward throughout 2013 before rebounding again in 2014. As the U.S. labor market approaches towards full employment (which in the Austin area has largely already been achieved), we expect wage growth to uptrend thereby providing a needed boost for income growth in the area going forward in 2016.
The Austin area housing market is extremely tight, with home prices growing above 10.6 percent year-over-year in 2015Q2. According to the Austin Board of Realtors, home sales in the Austin area are approaching an all time high (about 3,149) in July 2015 with a year-over-year growth of 12 percent. Tighter housing supply, a lower mortgage rate environment and favorable income growth are contributing to overheated housing markets in the area. As home inventories build up with increased home construction and home affordability decreases, we expect home prices to appreciate at a slower pace in 2016 and 2017.
Click here for the complete Austin Regional Economic Update: Austin_2015_Q3.