October 8th, 2007 4:07 PM
By American-Statesman writer M.B. Taboada


The national housing meltdown began to trickle into the Austin market in August, with existing home sales down more than 10 percent from a year ago, according to a report by the Austin Board of Realtors. Not since 2002 have Austin-area home sales declined in August, typically one of the top-selling months. In addition, the number of Central Texas homes on the market -9,819- was at a four-year high, up 21 percent from a year ago.

The slowdown in sales was steepest for homes priced below $200,000, which make up more than half of the Central Texas market. Sales for such homes were down 16.7 percent in the area, mirroring problems nationwide as lenders tighten credit standards and make it more difficult for entry-level home buyers to get mortgages.

Sales were also down significantly, about 7 percent, for homes priced from $200,000 to $399,999. And the two categories combined account for more than 85 percent of the Central Texas housing market. In a sign that September may suffer an even bigger slowdown, pending sales in August were down 24 percent from a year earlier. However, home prices continued to rise, with the median up 6 percent from a year ago to $192,200. The increase was in a sharp contrast to flat or declining prices on the East and West coasts.

Experts said the rising values in Central Texas are a combination of home appreciations, more home sales in expensive categories and higher home-building costs.

The Austin market is still healthy, experts said, just not as strong as it was in record-breaking 2006.

"All we're seeing is a maturing of the market," said Mark Sprague, Austin partner of Residential Strategies, which tracks and forecasts real estate trends. "It's not as great as it was last year, but it's still a great market."

Last year, 26,958 homes sold in the area, a 10 percent increase over 2005, and real estate experts predicted that 2007 would be slightly slower than 2006. So far this year, homes sales are down 3 percent from last year.

And the Austin market is proving more resilient than most other parts of the country, with homes taking 58 days on average to sell, still considered a seller's market.

Real estate experts remain optimistic about the market because Central Texas continues to have healthy job growth, with the lowest August unemployment rate in six years. Austin's steadily increasing population also is keeping a solid demand for housing.

Austin's housing market fared better than that in Houston, where sales slowed nearly 13 percent from a year ago. In Dallas-Fort Worth, home sales tracked the Austin market, down 10 percent. The San Antonio market had the smallest decline, 7 percent.

"The market here is stronger than it is across the U.S., but we may be starting to feel some of the pain that the rest of the country is feeling," said David M. Cox, president of East Village Properties Ltd., an East Austin-based real estate investment firm. "I just don't think it's as big of a problem as it is everywhere else."

Cox added that the higher inventory could reflect homes put on the market by homeowners who are having trouble paying their property taxes or making their mortgage payments. In some cases, homeowners have been unable to make their payments as adjustable rate mortgages reset to higher rates. In other cases, homeowners are listing their properties so they can cash out for "top dollar" while the local market is still strong, he said.

Sprague said that while the local market remains strong, the slowdown around the country does have some impact because there are fewer investors, particularly from California, who are snatching up property as quickly. In addition, Sprague said, homeowners previously may have qualified for a second home loan without selling their first home, but now, "it's no longer true.