Home and auto sales continued to purr in November, but general spending and home construction took a nosedive, causing the Greater Waco Economic Index to decline for the month compared to October’s all-time high, Amarillo-based economist Karr Ingham reported this week.
A total of 180 homes changed hands in November, a 14 percent increase from the same month in 2015, “and the year-to-date total remains well into record territory, up by nearly 5 percent compared to the first 11 months” of last year, Ingham said.
He prepares a monthly snapshot of local economic trends for the First National Bank of Central Texas and the Waco Tribune-Herald. He uses data dating to the year 2000 to track consumer spending, employment and construction.
The raw index reached a record 124.2 in October but slipped to 123.8 in November, which still topped the 120.9 of November 2015.
“That marks the first month-to-month decline in 10 months and only the fifth since the current expansion began in earnest in February 2012,” Ingham said in his summary.
Retail spending in November, the month in which consumers typically start their holiday shopping, totaled $329 million, a 2.8 percent increase from November the previous year. Ingham called that “respectable” and said real taxable spending for the first 11 months of 2016 was up 2 percent from the same period in 2015, which in turn was up by 4.5 percent compared to the first 11 months of 2014.
The cities for which sales tax is analyzed include Waco, Bellmead, Beverly Hills, Hewitt, Lacy Lakeview, Lorena, McGregor, Robinson, West and Woodway. Hewitt stands to see its sales tax revenue increase considerably with a new Wal-Mart superstore scheduled to open Jan. 25 at Interstate 35 and Sun Valley Boulevard.
In related news, Texas Comptroller Glenn Hegar reported Wednesday that state sales tax revenue totaled $2.44 billion in December, a 4.9 percent increase from December of 2015. A portion of sales taxes collected by local entities goes to the state, which refunds a percentage through monthly sales tax rebates.
“Sales tax revenue growth was led by collections from sectors driven by consumer spending — retail trade and information services,” Hegar said in a press release. “Tax receipts from oil-and-natural-gas-related sectors continued to decline relative to the previous year.”
Sales tax revenue is the largest source of money for the state budget, accounting for 58 percent of all tax collections, according to the Comptroller’s Office.
The local economy added 2,200 jobs during the 12 months through November. The Waco Metropolitan Statistical Area, which includes McLennan and Falls counties, saw its jobless rate dip to 3.7 percent in November from 3.9 percent in October and 4 percent during the same month in 2015.
On the negative side, the rate of employment growth slipped to 1.9 percent in November after averaging 2.2 percent per month through October.
The continuing growth in home sales in Greater Waco has created upward pressure on the prices of those homes. The average price of a home sold during November was $181,208, which is 4.3 percent more than the $173,778 average a year earlier, according to Ingham’s findings.
CoreLogic, a global company that specializes in analyzing real estate data, came out this week with its monthly Home Price Index. It reported that Waco home prices in November increased 10.3 percent compared to those in November a year earlier.
Spokeswoman Lori Guyton said CoreLogic goes beyond calculating the prices of homes sold in a given month to create an average and uses its database to track the sales and price history of each piece of property that changes hands.
Nationally, home prices increased 7.1 percent year-over-year through November, according to CoreLogic, and those in Texas increased 7.0 percent.
The city of Waco issued 26 permits to build new homes in November, a 35 percent drop from the previous year, but 366 were issued during the first 11 months of the year, which was a 4.9 percent increase from the 349 issued during the same period a year earlier, Ingham said in his report.
Scott Bland, president of the Heart of Texas Builders Association, said the one-month dip in securing permits should cause no alarm.
“I still contend that builders with plans to place homes in Waco moved up their permitting to avoid the city’s new ordinance related to home construction,” Bland said, referring to new rules that became effective Oct. 1 and mandated the use of energy-saving materials and strategies that could add to the cost of new homes.
“They did everything they could to get their permits pulled in time to avoid those price increases,” Bland said. “November and December are typically slow months anyway, but this November was down from last year, in part because the local homebuilding market has been so hot.”
He said production builders including D.R. Horton have moved heavily into the Waco market.
“The next couple of years, I think home construction is just going to get bigger,” Bland said. “Baylor University has grown so much, and Waco and the Greater Waco Chamber have done a great job of getting industry to locate here.
“Waco has kind of become the sweet spot in the state. The more traffic congestion one sees in Austin, Dallas and Houston, the more people find our quality of life appealing. You can make people stay in traffic for three hours a day for just so long.”
Building permit activity for projects other than residential construction was off sharply for the third straight month.
“In fact, the last two months’ permit valuation totals were the lowest of the year and were down by 64 percent and 77 percent, respectively, year-over-year,” Ingham said.
That pulled the year-to-date total into negative territory for the first time in 2016, down by more than 13 percent compared to last year.”
Raw figures show building permits valued at $320 million were issued through the first 11 months, down from $370 million.
Consumers continue to visit local vehicle dealerships in droves and make purchases when they get there. They paid $44 million for new and used cars and trucks in November, a month-over-month increase of more than 13 percent. For the year, automobile spending is up more than 8 percent, Ingham reported.
Local lodging establishments continue to benefit from the popularity of attractions including Magnolia Market at the Silos, with revenues from the hotel and motel tax running $43 million through November, an increase of almost 16 percent from the same period in 2015.
“The Greater Waco Economic Index will sometimes undergo a random monthly decline during an economic expansion that is not at all indicative of the end of that expansion and the onset of economic contraction,” Ingham wrote to conclude his report. “A one-month decline would never lead to that conclusion.”