Consumer spending and permits issued for construction of new homes showed solid gains in January, but the Greater Waco Economic Index slipped for the month because of a decline in existing home sales, according to a report released this week by Amarillo-based economist Karr Ingham.
“The spending indicators were higher in January, auto sales in particular, and new housing construction permits were sharply higher compared to an especially low total in January of last year,” Ingham said.
He prepares a monthly snapshot of local economic conditions for the First National Bank of Central Texas and the Waco Tribune-Herald, based on data dating back to the year 2000.
In this month’s summary, Ingham said raw figures for the GWEI show the index slipped to 124.1 in January from 124.2 in December. It was up from 120.7 in January of last year.
Spending saved the day for the January index, as consumers shelled out $265 million for retail purchases, an almost 3 percent increase from the $258 million spent in January a year earlier.
For the 12 months ending January 2017, general retail spending has increased a modest 1.8 percent compared to the prior 12 month period. The cities for which sales tax is aggregated and analyzed include Waco, Bellmead, Beverly Hills, Hewitt, Lacy Lakeview, Lorena, McGregor, Robinson, West and Woodway.
A total of 33 building permits were issued in January for construction of new single-family homes in Waco, which was more than double the 14 permits issued the same month last year.
Scott Bland, president of the Heart of Texas Builders Association, said many of those permits were secured by Fort Worth-based D.R. Horton, which has launched a 1,500-home subdivision called Park Meadows, on Ritchie Road near Woodway and Hewitt.
“That 33 in January is fine, but it is less than we’re capable of,” Bland said. “We’ve got a problem right now in that custom builders don’t have dirt on which to build. We have more people wanting homes than we have lots. It’s a nice problem to have, but it’s still a problem.”
The sales of existing homes logged a year-over-year decline in January, when 119 residences changed hands, compared to 130 in January of last year, a decline of 8.5 percent.
Whitney Richter, manager of business development and marketing for the Greater Waco Chamber of Commerce, said she is hearing reports of homes selling so quickly they do not appear on the Multiple Listing Service and would not be reflected in sales totals.
“Also, our inventory is low,” Richter said.
The Texas A&M Real Estate Center reports that Waco’s backlog of homes for sale stands at only 2.6 months, meaning it would take less than three months to sell all available homes at the current rate of sales, she said.
Ron Nelson, a real estate specialist at the First National Bank of Central Texas, said he could vouch for home demand locally.
Nelson said he was working with a woman trying to sell a home for less than $200,000 in a desirable area of Greater Waco. He said she made a sale in two days but worried about it falling through.
“I told her if that happens to raise the price,” Nelson said.
Nelson said the occupancy rate for rental property is approaching a record high, and rental rates are increasing because of demand.
“You would be hard-pressed to find a single-family home or duplex renting at less than $1,000 that used to available for about $800 a month,” he said.
Ingham said the January drop in home sales is unusual.
“This component of the GWEI has been trending higher and is up by 6.5 percent year-over-year for the 12 months ending in January,” Ingham said.
The average price for a home sold in January stood at $164,030, which was a modest 1.6 percent higher than the $161,371 norm a year earlier.
A total of $53 million was spent on new and used vehicles in January, a 19 percent increase from the $44 million spent in January of last year, which in turn was up nearly 6.5 percent compared to January of the prior year, Ingham said.
“Auto spending in Waco continues to press ever deeper into record territory. Total real auto spending in the 12 months ending January 2017 was up by a stout 8 percent compared to the previous 12 months,” Ingham said in his report.
Nationally, the sale of new cars and trucks declined 1.8 percent compared to January of 2016, according to Detroit News, a trade magazine. It said demand for utility vehicles, such as crossovers, SUVs and pickups, “continued to help many automakers offset heavy losses in passenger cars,” which saw a 12.2 percent decline.
Building permits for general construction totaled $22.5 million in value last month, a 36.8 percent drop from the $35.6 million value in January of last year, Ingham said.
Ingham estimates that payroll employment for the Waco Metropolitan Statistical Area, which includes McLennan and Falls counties, totaled 117,800 in January, up from 115,100 in January the previous year, a 2.3 percent increase.
He estimates the unemployment rate stood at 4.1 percent.
The Texas Workforce Commission is scheduled to release January jobless data on March 10 as part of its annual employment data revision process in which the commission sets new benchmarks for estimating monthly unemployment figures going forward.
Several business leaders attended a discussion of Ingham’s findings at the First National Bank of Central Texas and commented on developments in their sectors.
Ken Mathis, chief financial officer for Magnolia Homes, Magnolia Market and Magnolia Realty, said Chip and Joanna Gaines hope to complete the renovation of the historic Elite Cafe on Waco’s traffic circle in time to open in the fall. They plan to operate a breakfast-centric diner.
Mathis said the Gaineses are negotiating to acquire a property “outside Waco” they would transform into a vacation rental. He stressed that talks are continuing, and a deal is not done.
He said the biggest project on the Magnolia radar this year is converting one of the two silos at Sixth Street and Webster Avenue into a store carrying merchandise chosen by Chip Gaines.
Tom Stanton, executive director of the Bernard and Audre Rapoport Foundation, said the next gift bestowed by the foundation will push its total philanthropic giving to more than $70 million.