Houston Economic Indicators

Houston’s job growth continued to moderate in March. However, layoff announcements did not signal a spike in job losses. Export volumes through the Port of Houston continued to grow strongly while imports have ticked up moderately since November. Indicators for Houston’s single-family real estate market were healthy despite higher mortgage rates. There was strong activity in both new, single-family construction permits and existing-home sales in March, and the inventory of homes on the market improved. However, permits for building new multifamily units were low.

Employment

Employment growth strong except in trade and energy

Year to date, Houston’s employment grew an annualized 1.8 percent (or 15,310 jobs) in March, on par with the trend rate of job growth (Chart 1). The strongest gains were in education and health services, which saw a 5.0 percent increase (5,662). Educational services and hospitals led growth in this sector, each expanding approximately 7.0 percent, annualized. Leisure and hospitality and manufacturing both saw increases, with annualized growth rates of 3.3 percent and 3.2 percent, respectively.

These year-to-date gains were offset by losses in trade, transportation, and utilities (-4,541) and in mining (-1,031). Trade, transportation, and utilities contracted an annualized 2.6 percent in first quarter 2024. Because this is Houston’s largest employment sector, this decline weighed heavily on the metro’s overall growth. Losses were heaviest in retail trade, which declined an annualized 5.3 percent (-4,410) and were led by clothing, building materials and motor vehicles.

However, employment growth was stronger year over year in March, increasing 2.4 percent (79,340). Similarly to the year-to-date data, education and health services was the growth leader at 4.9 percent year over year (21,690). Over the past year, Houston’s labor market was strong with no major sectors experiencing employment declines.

Layoff announcements level off

Large firms in the Houston metropolitan statistical area (MSA) announced the layoff of 91 workers in March but none in April. The actual date of worker separation lags the announcement by two to three months. In a three-month moving average, layoffs hit a high of 332 in January 2024 and ticked down to 272 in March then 30.3 in April (Chart 2). Despite a wave of separations in January, low levels in the preceding and following months indicate that the labor market remains strong.

International trade

The Port of Houston is one of the world’s largest ports, and Houston boasts a strong share of employment in trade and transportation. Since dollar values of total trade are highly correlated with the prices of oil, gas, and petroleum products, actual vessel tonnage is a clearer measure of the port’s activity.

In February 2024, exports from the Houston–Galveston District increased to 30.7 million metric tons (MT), and imports ticked up to 7.2 million MT. The three-month moving average of February exports was 29.9 million MT, and imports were 6.8 million MT (Chart 3).

Exports from the port have been growing strongly since 2016. Oil and gas produced in the U.S. are piped to refineries and petrochemical plants in Houston and then exported across the world. Conversely, import tonnage has been declining since the mid-2000s, though there has been a slight uptick since November 2023.

Residential real estate

Single-family building permits remain high

The three-month moving average of building permits for single-family homes in the Houston MSA ticked down slightly to 4,379 in March from 4,392 in February (Chart 4). The number of permits has remained mostly flat since May 2023; however, the level at which they have plateaued is still higher than prepandemic averages. From January 2013 to January 2020, single-family building permits averaged 3,154 per month. Since March 2023, they have averaged 4,316 per month.

Multifamily construction permits in Houston declined from a peak of 3,197 units in August 2022 to 1,124 in March 2024 on a three-month moving average. However, March’s data show a slight increase from February’s 941 units.

Houston multifamily rent growth slows

Houston’s multifamily new-lease rent index increased 1.2 percent year over year in March (Chart 5). This was a dramatic slowdown from the 12.3 percent increase in March 2022. Rental markets in other Texas metros saw rents drop in March due to an increase in the supply of units and a slowing in demand.

Houston did not see rent increases comparable to other metros in Texas or the nation postpandemic. A surge in construction from 2016 to 2020 meant Houston’s residential market was not as tight leading into the pandemic as other Texas metros.

Existing-home inventory builds as sales decline from early 2022 highs

Mortgage rates rose to 7.6 percent in April from 6.9 in April 2023 but remained below 2023 highs. The high rates have slowed the housing market from the postpandemic-boom period, particularly the existing-home market.

Existing-home sales in Houston rose from 7,352 in January to 7,616 in February but remained well below their postpandemic high of 10,234 in January 2022. To put that in context, Houston’s existing-home sales averaged about 7,000 per month from 2014 through 2019.

Houston’s inventory of homes ticked up to 3.7 months of supply in February from 3.5 months in January due to a sharp pickup in the number of homes listed for sale (Chart 6). A balanced housing market is generally thought to have four to five months of inventory. Houston averaged 3.5 months of inventory from 2015 to 2019 during the relatively stable period of modest increases in nominal home prices between the Great Recession and the pandemic.