Austin Business Journal – by Greg Barr

The Texas economy is predicted to begin a slow, steady recovery in 2010, according to an economic report released Monday.

After a small contraction in 2009, the state’s gross domestic product is expected to increase by 1.7 percent in 2010, aided in part by a surge in home sales, according to economists with BBVA Compass. The GDP of the entire country, by contrast, is predicted to increase by only 0.2 percent next year.

The bank’s U.S. Regional Watch third-quarter report released Monday, said that although the worst of the economic crisis has passed, fiscal pressures will affect some states more than others and dictate the pace of their recovery.

Though 48 states predicted budget shortfalls at the beginning of the year, with Texas projecting a 9.5 percent deficit, it is the only state among the seven Sun Belt states covered by BBVA Compass to forecast a balanced budget in 2010.

“Texas has fared the best with revenue growth exceeding the U.S. average,” the report said. “The higher than average growth throughout 2008 could be one of the reasons that Texas is better positioned with a smaller than average budget gap going into FY2010 and no expected gap for FY2011.”

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Washington, September 24, 2009

Existing-home sales in August gave back some of their strong gain in July but remain above year-ago levels, according to the National Association of Realtors®.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – declined 2.7 percent to a seasonally adjusted annual rate¹ of 5.10 million units in August from a pace of 5.24 million in July, but remain 3.4 percent above the 4.93 million-unit level in August 2008. In the previous four months, sales had risen a total of 15.2 percent.

Lawrence Yun, NAR chief economist, said the tax credit is working. “Home sales retrenched from a very strong improvement in July but continue to be much higher than before the stimulus. The first-time buyer tax credit is having the intended impact of bringing buyers into the market, allowing them to take advantage of very favorable affordability conditions,” he said. “Some of the give-back in closed sales appears to result from rising numbers of contracts entering the system, with some fallouts and a backlog contributing to a longer closing process, but the decline demonstrates we can’t take a housing rebound for granted.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 5.19 percent in August from 5.22 percent in July; the rate was 6.48 percent in August 2008.

An NAR practitioner survey shows first-time buyers purchased 30 percent of homes in August, and that distressed homes accounted for 31 percent of transactions; both were unchanged from July.

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Total housing inventory at the end of August fell 10.8 percent to 3.62 million existing homes available for sale, which represents an 8.5-month supply² at the current sales pace, down from a 9.3-month supply in July. Unsold inventory totals are 16.4 percent lower than a year ago.

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