Economic activity in May hit a record high in the Bryan-College Station area as growing payroll employment led the way with a 4.5 percent gain over the number employed in May 2017.
“Everything is still going very strong. Employment is very good,” said Tom Maynard, senior vice president and regional manager of Commerce National Bank in Bryan-College Station.
With 5,300 jobs added to the local economy over the last 12 months, the Bryan-College Station community surpassed Odessa to claim the No. 2 spot in Texas behind Midland. With a drop to 2.8 percent, the unemployment rate was also headed toward record territory.
The local index of economic indicators reached 156.2 for the first time, a 2.2 percent increase over May 2017.
The one sector of the economy out of sync with the growing economy is construction – commercial and home building. The numbers in 2017 were so strong, 2018’s numbers are returning to more normal level. But home sales are still strong.
Even though the B-CS Economic Index has shown short periods of weakness over the past year, the general pattern of growth has not been interrupted. The current expansion in the economy has been in place for a remarkable seven years as of this May. After the recession, which began in December 2008, the economy didn’t see a sustained upturn until May 2011.
On average, post-war expansions have lasted 60 months. The economy is now at 85. On the other hand, the economy has typically expanded to 123 percent of its prior peak before rolling over to a recession. Now we are 115 percent of the last peak, which would suggest the economy has a way to go.
Post-recession growth switched to a slower pace in 2015 and has continued to expand at lower rates. Recession-inducing excesses or imbalances in the systems may take longer to appear with slower growth.
“I think we’re still good for a few years – good steady growth,” Maynard said, “I don’t see a slowdown coming soon.”
General taxable spending, adjusted for inflation, posted its strongest increase in nearly a year with May sales tax receipts up by more than 6 percent compared to May 2017. Even at that, spending remains slightly negative for the year-to-date, down by 0.2 percent compared to the first five months of a year ago.
Auto sales continues to expand rapidly with inflation-adjusted spending on new and used motor vehicles at record levels. They rose 29 percent in May and 14 percent for the year-to-date. Auto sales reached the highest level ever for a single month. The Bryan-College Station combined building permit value for the month of May was respectable enough at nearly $51 million; however, it was still down more than 20 percent compared to the large numbers from May 2017. That marks the fourth double-digit percentage decline of the five months thus far in 2018 and the total for the year-to-date is now down by 38 percent compared to the first five months of 2017.
The number of permits pulled for single-family housing in the area is also sharply lower so far in 2018. The May monthly permit total was down by some 32 percent compared to the May 2017 total, which was the second-highest May monthly total on record. For the year-to-date, the number of new housing construction permits issued is off by 24 percent compared to the same period a year ago. It is the lowest January-May total since 2013.
There may be a number of factors affecting single-family construction market. One is hold-over inventory from specs that didn’t sell in the fall, Maynard said. He also noted a lot of homes for sale in the Pebble Creek Country Club subdivision. “I found out that an assisted-living complex is being built nearby and some residents are moving into that complex to avoid maintenance time and expenses.”
“Demand for custom homes is good,” Maynard explained. “Under $200,000 will sell immediately and sometimes over the asking price. In new subdivisions, lot prices are approaching $100,000 and even higher. That makes it difficult to find newly constructed homes less than $250,000.”
In May, 385 existing homes sales closed, tying the sales record for the month of May, set in both 2015 and 2017. Home sales for the year-to-date are down just slightly compared to the record total through May of a year ago. Their average price was up by 4.6 percent for the month compared to May of a year ago, which, in turn, was up more than 6 percent compared to May of the prior year. The average price through the first five months of the year is up by 5.7 percent compared to a year ago, which in turn was up by nearly 8 percent compared to the previous year’s average through May.
That pushes the inflation-adjusted, total-dollar volume of residential real estate sales activity to record levels in 2018, posting a 1.7 percent increase in May, and a 1.8 percent increase through the first five months of the year, which also were up by 17 percent and 15 percent, respectively, compared to the previous year.
“People are still moving into the area,” Maynard said. “Demand for housing is coming from young professionals, newcomers and Aggie graduates who are retiring and moving back to the area.” The Bryan-College Station area has good medical facilities, cultural performances and is close to Houston and other big cities, he explained, expecting that trend to persist.