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Texas Economic Growth 'Moderating Somewhat,' says Dallas Fed Economist

State job gains continue to outpace nation but housing cools slightly

For Immediate Release: November 14, 2018

DALLAS—The Texas economy continues to expand but is showing signs of moderating, according to the Federal Reserve Bank of Dallas' latest Texas Economic Update.

"The Texas economy is continuing to grow at a robust pace, although it's moderating somewhat from what we saw earlier in the year," said Dallas Fed Assistant Economist Christopher Slijk in a video accompanying the release. "Job growth in the third quarter was 2.4 percent, which is down from the previous two quarters but still outpacing the national average."

Job gains have been broad-based across the state's major metropolitan areas, Slijk said, with Houston, Austin and El Paso all growing at a 3.9 percent annualized rate. Slowing in Texas' overall rate of job growth is related to more sluggish activity in the state's smaller metro and nonmetro areas as well as in Fort Worth.

The Texas unemployment rate fell to a historical low of 3.8 percent in September, according to the report. Amid this tight labor market, executives responding to the Dallas Fed's Texas Business Outlook surveys are reporting upward pressure on wages and difficulty finding qualified workers, Slijk said.

The Texas housing market has decelerated somewhat over the past few months in what could be a sign of both supply and demand issues, according to the report.

"We've seen some cooling off in Texas housing markets over the past few months," Slijk said. "Across the major state metros, home sales have been flat or down compared to recent highs. Across price brackets, we've seen the most slowing in homes sold between $250,000 and $749,000, which have been the major drivers of growth over the last few years."

Texas home inventories are at a very low 3.7 months' supply, suggesting a very tight housing market, which could be constraining home sales, Slijk said. Rising mortgage rates and the subsequent dip in housing affordability across Texas metros also could be constraining factors, he said.

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Media contact:
James Hoard
Federal Reserve Bank of Dallas
Phone: (214) 922-5307
E-mail: james.hoard@dal.frb.org