Texas residential mortgage industry welcomes upward trend for origination volume and values

COLLEGE STATION, Tex. (Texas Real Estate Research Center) – Optimism in the state’s residential mortgage industry is the strongest it has been in almost 18 months, according to the latest Texas Residential Mortgage Survey (TRMS). Respondents expect conditions to improve over the next two quarters.

“The mortgage survey revealed optimistic opinions regarding residential mortgage activity,” said Wes Miller, senior research associate at the Texas Real Estate Research Center at Texas A&M University (TRERC). “Although mortgage interest rates ticked back up in February, origination volume and values trended upward after sliding for most of 2023.”

The purchase-origination market drove the recent improvement, and there was a significant increase in the number of pre-approved customers looking for homes.

“Headwinds from 2023 remain sustained due to the continued high interest rate environment, affordability struggles, and record-low housing inventory in most Texas markets,” said Texas Mortgage Bankers Association (TMBA) Vice President Jodie D. Morgan. “However, Texas is somewhat insulated from these challenges because our robust economy, lack of state income taxes, and no taxes on perishable goods help ease affordability issues compared to other regions.”

Mortgage bankers’ cautious optimism likely reflects measured improvement in key metrics:

• Growth in average hourly wages has outpaced the nation for the past eight months, providing additional purchasing power.
• The market for refinances has shown signs of stabilizing and is projected to expand through the first half of 2024.
• The number of existing homes sold through Texas Multiple Listing Services (MLS) increased year-over-year for the second straight month in February after 21 consecutive months of decline.

“Cautious optimism is emerging, and homebuilders’ positive outlook is on the rise. Plus, there was a modest increase in existing-home sales in January that provided a much-needed boost to mortgage pipelines,” Morgan said.

With a notable increase in the business activity index, TRMS responses indicated mortgage pipeline improvement heightened confidence that industry activity is poised to accelerate. The elevated reading in the February company outlook was the highest level since the survey began in September 2022.

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ABOUT THE SURVEY 
The Texas Residential Mortgage Survey (TRMS) is a collaborative effort between the Texas Mortgage Bankers Association (TMBA) and TRERC to provide analysis of conditions and changes in the residential mortgage industry. Designed as a monthly sentiment survey to gauge current conditions and expectations in and around the Texas residential mortgage industry, all TMBA members are invited to participate.

ABOUT TRERC 
The Texas Real Estate Research Center at Texas A&M University (TRERC) is the nation’s largest publicly funded organization devoted to real estate research. Created by the state legislature in 1971 to meet the data and knowledge sharing needs of many audiences, including the real estate industry, instructors, researchers, legislators, and the public, the Center creates public content, including digital and print documents, publications, and multiple format videos which are available at the Center’s website. Subscribe to TRERC news releases and other publications here.