The local economy turned sluggish in July, with employment growth, general construction and permits issued to build new homes falling on hard times and pushing the Greater Waco Economic Index downward.
The index, which gauges an array of local economic trends, has mostly tread water in recent months, “though it remains at or near its all-time high,” said Amarillo-based economist Karr Ingham, who prepares the monthly snapshot for the First National Bank of Central Texas and Tribune-Herald using data dating to 2000.
Raw numbers show the index retreated to 124.4 in July, down from a revised 125.5 in June, though it eclipsed the score from last year.
Among the few bright spots in the July report was the sale of existing homes, which increased about 5 percent from July of 2016. Through last month, home sales are fractionally below the 1,609 that changed hands during the first seven months of last year, Ingham said.
Homebuyers sealing deals last month paid an average of $192,977, a slight bump from $190,837 a year ago.
Local trends run counter national trends, according to a National Association of Realtors report Thursday saying sales of existing homes fell 1.3 percent to a seasonally adjusted annual rate of 5.44 million. That is the lowest level of the year, though sales are running 2.1 percent higher than last year.
Trammell Kelly, a residential sales specialist for Kelly Realtors who has been brokering homes for about 30 years, said the Waco market remains as hot as he’s ever seen it, hampered only by a shortage of inventory.
“If we’re down in sales from last year, it’s only slightly, and if I had to attribute that to anything, it’s due to availability,” Kelly said. “You better not put your house out there or it will sell, and will sell for top dollar. Then you’re asking yourself where you are going to go.
“I listed three houses on my block, and each one sold in 48 hours or less, with all of them having multiple contracts. I’m not going to say that will happen every time, but it is not unusual.”
He said he lives in a part of Waco in the Midway Independent School District where homes typically sell for $250,000 and above.
He said he was intrigued by news Thursday that a local developer will build 260 homes in Lorena each priced at $500,000 and above.
“That’s a very bold move, but I think it will work,” Kelly said. “I’ve been involved in selling homes in the Rancho Lorena subdivision the last five years, and there are only five lots left. I met quite a large number of people wanting homes already built, or homes coming up, and those out there primarily were custom homes. There were no speculative homes on the ground. I wish them well in their decision to build spec homes, and I know there is a market for $300,000 to $500,000 residences.”
Ingham said in his report those buying homes through July paid a combined $306 million for their purchases, which represents a 3 percent increase from the same period last year, “which in turn was up by 6.7 percent from the first seven months of 2016.”
On the negative side, the city of Waco issued 26 permits in July for construction of single-family homes, down from 45 in July 2016. Apparently, builders were catching their breath, as permits issued so far this year total 289, well above the 233 during the first seven months of last year.
Ingham counts only permits issued by the city of Waco, not in surrounding communities seeing new subdivisions take shape. Ingham said he has had problems securing timely information about permits from these cities.
Waco’s tourism industry continues to make waves, with local lodging establishments generating $5.2 million in revenue last month, an almost 15 percent year-over-year increase. The sector has brought in almost $30 million for the year.
Another bright spot was in auto sales.
Inflation-adjusted spending on new and used vehicles in July increased by more than 10 percent for the second straight month. Auto sales remain 4 percent above 2016 levels, which were 9 percent higher than the first seven months of 2015.
So far this year, sales of new and used cars have totaled $353 million in the Greater Waco area.
Peter Kultgen, president of Bird-Kultgen Ford, said changes in buying habits due to falling gasoline prices are impacting the industry. Customers again are indulging in pickups and SUVs that carry higher prices than smaller, fuel-efficient models that previously grabbed most of the attention.
“Also, a lot of the experts were predicting that prices on used cars would begin falling during the last half of last year and the first half of this year,” he said. “The thinking was that the recovering auto industry would prompt the return of many leased models, creating an abundance of used cars.
“That has not happened. In fact, some of the used models our customers are requesting are not available at the auctions we attend in Dallas and Houston.”
Employment in the Waco Metropolitan Statistical Area, which includes Falls and McLennan counties, grew by a modest 300 jobs over the past 12 months. That’s only three-tenths of a percent, placing the Waco MSA 21st among the 26 MSAs in Texas, according to Ingham.
“The Waco metro area unemployment rate did slip back below its year-ago level for the first time in the last year, at 4.4 percent in July, compared to 4.5 percent in July 2016,” Ingham said in his report.
The value of permits for general construction fell 27 percent in July and is down almost 15 percent for all of 2017 compared to last year, Ingham said.
Auto sales continue to purr, with inflation-adjusted spending on new and used vehicles in July increasing by more than 10 percent for the second straight month. Auto sales remain 4 percent above 2016 levels, which were 9 percent higher than those during the first seven months of 2015.
Peter Kultgen, president of Bird-Kultgen Ford, said changes in buying habits due to falling gasoline prices are impacting the industry. Customers again are indulging in pickups and SUVs that carry higher prices than smaller, fuel-efficient models formerly in demand.