A Texas-Sized Housing Recovery

Home sales are showing some traction in the Lone Star State; will other markets follow?

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The skyline of downtown Dallas, Texas.

They say everything's bigger in Texas, including, it seems, the housing market recovery.

Real estate agents in Dallas-Fort Worth sold almost 8,000 single-family homes in August, according to the Dallas Morning News, an 18 percent increase over July and the 14th consecutive month purchases have been higher than the year before.

Another landmark: August sales in the region mark the largest number sold in a single month since the start of the recession in 2007. Meanwhile, median sales prices were 8 percent ahead of levels a year ago.

What's more, Dallas-Fort Worth isn't alone. Other major Texas markets including Houston, Austin, and San Antonio are also seeing more than just a few green shoots in their housing markets.

"We haven't seen the typical slowdown in September when school starts," says Raylene Lewis, a Century 21 Realtor based in College Station, Texas. "Interest rates are still so low, and people are really taking advantage of that—right now we have 8 closings set for September."

While it's good news that the Texas real estate market is roaring along, it isn't entirely unexpected, says Jim Gaines, a research economist at Texas A&M University's Real Estate Center. The Lone Star State didn't suffer as severe a recession or housing bust as some other states, which has made its climb back out easier.

"We started [the recession] later and it didn't go as deep," Gaines says. He adds that while Texas saw its share of subprime lending, the fact that the jobs situation didn't deteriorate as much in the state as in others helped dampen the housing market carnage wrought from the collapse of bad mortgages.

"We didn't have the financial leverage," Gaines says. "We had subprime lending, but that works as long as people have jobs, so you had these offsetting factors."

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The energy boom has also benefited Texas immensely. Natural gas and oil refining have created thousands of jobs, and where there are jobs, there is housing demand. That's helped places such as Dallas post impressive sales numbers. Price increases still remain muted, according to local Realtors, but that's not too much of a concern.

In fact, the lower-than-average property values in Texas' major metro areas are another boon, especially for homebuyers looking to the get the most bang for their buck while still living in a big, urban environment.

"We had median prices go up, but we didn't have a true bubble," Gaines says of the wild price appreciation in many metro areas that ended up crippling the housing market. "Even now you can't find a new single-family home in most major metro areas for under $200,000. That's not the case in Houston or Dallas."

But although Texas might have been dealt a better hand when it comes to housing, the recovery there is an important bellwether for the recovery in the rest of the nation. Success in the Lone Star State could be a precursor to more widespread gains in the broader housing market.

Meg Handley is a reporter for U.S. News & World Report. You can reach her at mhandley@usnews.com and follow her on Twitter at @mmhandley.