Texas home prices in Q1 were 7% higher than in Q4 2007 pre-recession peak, but increased homebuilding activity should slow rate of single-family home price increases; home sales in April rose at annualized rate of 23%: Federal Reserve Bank of Dallas

DALLAS , June 13, 2013 (press release) – Texas one of just 10 states above its prerecession top in home prices, says Dallas Fed’s Southwest Economy

The second quarter issue of the Federal Reserve Bank of Dallas’ Southwest Economy includes articles on the Texas housing market, the profitability of U.S. banks and Mexico’s economic reforms.

A broad-based expansion of the Texas economy is underpinning the state’s swiftly recovering housing market, fueling rising home prices and increased home sales, according to business economist D’Ann Petersen and research analyst Christina Daly in “Texas Housing Recovery Gains Momentum.”

Through first quarter 2013, Texas home prices exceeded by 7 percent the prerecession peak recorded in fourth quarter 2007, the authors state. Through April, Texas home sales rose at an annualized 23 percent, a rate of increase approaching levels seen just before the peak of the housing boom.

Anecdotal reports from Dallas Fed industry contacts suggest a very competitive marketplace for homebuyers, with multiple offers on homes driving up prices.

“Stronger-than-average employment growth and consistent in-migration should continue boosting demand for homes and apartments,” the authors write.

Increased building activity should slow the ascent of prices in both the apartment and single-family home sectors, the authors note.

In “Banks Continue Their Recovery Despite Slowing Revenue Growth,” assistant vice president Kenneth J. Robinson finds banks in the Eleventh Federal Reserve District—Texas, northern Louisiana and southern New Mexico—are still outperforming their counterparts nationwide, though the gap between the two groups is narrowing.

In 2012, U.S. banks’ profitability, as measured by return on average assets, exceeded 1 percent for the first time since 2006, while profitability at Eleventh District banks exceeded 1 percent for a second straight year, according to Robinson.

U.S. banks also have seen improving asset quality and a rebound in lending, Robinson states. Still, concerns linger about banks’ future ability to earn sufficient revenue to maintain profitability.

Net interest margin—a traditional measure of banks’ revenue—has been slipping both nationally and in the Eleventh District, Robinson notes. The largest declines in net interest margin have occurred in banks with assets of fewer than $1 billion.

In “Will Reforms Pay Off This Time? Experts Assess Mexico’s Prospects,” Dallas Fed economists review the proceedings from a recent Dallas Fed conference, “Mexico: How to Tap Progress.”

The conference examined why economic expansion in Mexico has barely kept up with population growth and why the nation’s per capita income growth has trailed that of emerging-market economies such as Brazil and Chile, the authors note.

Conference presentations, now available online, focused on the informal economy in the country, national energy monopoly Pemex, and the rule of law and the drug cartels’ impact.
This issue of Southwest Economy also features an “On the Record” conversation with Greg L. Armstrong, chairman and CEO of Plains All American Pipeline LP, and a “Spotlight” article on Mexico’s growing social safety net.


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