The San Antonio area, being the staging ground for Eagle Ford Shale development, is under significant economic pressure due to falling energy prices. As the profitability of less productive wells diminished, rig counts for both oil and natural gas fell. According to Baker Hughes, oil rig counts were down by an astounding 68 percent and natural gas rig counts were down by 15 percent by early November 2015 compared to a year prior in the Eagle Ford Basin. On the other hand, new well oil production per rig rose to nearly 800 barrels per day in the Basin, thereby contributing increased crude oil supply and further downward pressure on prices. With drilling activity substantially down in the region, both energy and non-energy jobs are at risk.
Despite the difficulties, the San Antonio metropolitan region managed to create more than 11,600 nonfarm payroll jobs in the third quarter of 2015 after a soft second quarter. More than 10,000 of those jobs came from the service sector. Consequently, the region’s unemployment rate fell to 3.5 percent by the end of September 2015 from 4.4 percent a year prior. However, the region’s labor force declined in the second and third quarters in 2015, not a good indication. If oil and gas prices remain weak, we expect a large number of energy workers to leave the area in the next year, causing a ripple effect on the already strained regional economy.
The housing market in the San Antonio region is currently at its peak. Home prices were up by 10.3 percent in 2015Q3 over the previous year. According to the San Antonio Board of Realtors, home sales grew at five percent year-over-year through October 2015, and on average, homes spent eight percent less time on the market than the same period last year. One striking feature of San Antonio’s real estate market is that there is more activity in single-family home construction than in multifamily. Single-family housing starts grew by five percent in 2015Q2 and 2015Q3 over the previous year. Multifamily housing starts have lost steam this year. Total housing starts are down 16.5 percent from a year ago so far in 2015.
Click here for the complete San Antonio MSA Regional Economic Update: SanAntonio 2015Q4.