Strong Employment Growth and an Increase in Multifamily Construction
HUD’s Comprehensive Housing Market Analyses provide information on changes in local economies, housing markets, and populations and provide 3-year forecasts for demand in the area. This article is part of a series that sheds light on the content of these analyses.
The Austin-Round Rock Housing Market Area (Austin HMA) consists of five counties in central Texas — Bastrop, Caldwell, Hays, Travis, and Williamson — with an estimated population of 2.16 million. Austin, the state capital and the county seat of Travis County, is known for its live music and entertainment and hosts many major festivals and music events. The South by Southwest and Austin City Limits music festivals attract more than a half-million people to the area with an economic impact of more than $600 million. A recent comprehensive housing market analysis highlighted the economic and housing market activities in the Austin HMA.
Economy: Professional and Business Services Sector Leads Employment Growth
The Austin HMA’s economy has been experiencing strong growth. The unemployment rate is 3 percent, which is the lowest reported since 2000, and current nonfarm payrolls totaled more than 1.04 million for an increase of 33,100 jobs, or 3.3 percent over the past year. Since 2010, nonfarm payrolls have increased by an average of 32,450 jobs, or 3.7 percent annually, and growth is expected to continue at a rate of 3 percent over the next 3 years.
Nearly all sectors in the HMA have seen widespread employment growth. The professional and business services sector and the government sector are the area’s largest employment sectors, employing 179,600 and 179,000 people, respectively, and accounting for more than 34 percent of the workforce. Over the past year, the professional and business service sector grew by 5.3 percent, adding 9,100 jobs, more than any other sector in the area. In fact, since 2010, the professional and business services sector has been the HMA’s fastest-growing sector, increasing employment by an average of 6.1 percent annually. Many companies in the HMA have recently expanded and still others have expansions planned or underway, fueling the area’s economic growth.
Housing Demand Highest in the City of Austin
The Austin HMA sales market is tight with a vacancy rate of 0.8 percent, down from 2.3 percent in 2010. The low vacancy rate is the result of strong population growth, which has absorbed excess vacant units. Over the past year, home sales prices in Travis County, home to Austin, have risen 8 percent over the past year. Demand is estimated for 51,700 new homes over the next 3 years.
Building activity has been concentrated in the city of Austin because more people prefer to live closer to the city center. Building permitting in Travis County increased by more than 35 percent over the past year and has been concentrated in multifamily construction.
The overall rental housing market is balanced with a vacancy rate of 6.3 percent, down from 8.6 percent in 2010. The apartment market is also balanced with a vacancy rate 6.4 percent, up from 5.6 percent a year earlier. Demand is estimated for 29,950 new rental units. For more detailed information, see the recent Comprehensive Housing Market Analysis on the area.