March 16, 2022
Austin’s economic growth moderated in January. The Austin Business-Cycle Index rose at a slower pace, with the decline in the unemployment rate being somewhat offset by a slight decline in salaried employment. COVID-19 hospitalizations fell as the omicron wave waned, and cases fell to a three-month low. January home sales rebounded in the metro as the median home price continued to rise. This affected housing affordability, which slipped in the fourth quarter of 2021 to its lowest level since 2000.
Business cycle index
Austin’s business cycle index, a broad measure of economic activity, rose 2.5% at an annualized rate in January after rising 6.8% in December (Chart 1).
The unemployment rate is falling
Austin’s unemployment rate fell to 3.2% in January, the lowest level since February 2020 (Chart 2). That’s well below the state unemployment rate of 4.8% and the national rate of 4.0%. Metro labor force growth slowed from an annualized 2.7% in December to 0.4% in January. That compares to labor force growth of 4.0 percent for the state and 10.4 percent for the nation.
The wage bill is progressing positively in most sectors
Employment in Austin grew at an annualized rate of 3.5%, or 21,000 net jobs, in the three months ending January (Chart 3). Leisure and hospitality (up 9.1%, or 2,769 jobs) and trade, transport and utilities (up 9.1%, or 4,623 jobs) led overall growth, closely followed by professional and business services (up 8.7%, or 5,180 jobs). Sectors that saw a sharp drop in employment were other services (down 11.6% or 1,392 jobs), construction and mining (down 9.1% or 1,761 jobs) and financial activities (down 9.0%, or 1,773 jobs). In January 2022, Austin’s payroll was 5.5% higher than pre-pandemic levels (February 2020). Employment grew 8.7% year-over-year in December 2021.
The number of people hospitalized with COVID-19 in Austin and Texas has fallen from record highs in January (Chart 4). COVID-19 cases recently hit their lowest levels in Austin since late December, while statewide cases were at their lowest levels since July 2021. As of March 9, 165 people in Austin and 2,636 in the state were hospitalized with COVID-19.
Home sales up in January
January existing home sales in Austin increased 4.6 % month-on-month, down from 0.2% in December (Chart 5). Year-over-year sales in Austin fell 5.8%, while sales of existing homes in Texas hit a record high as sales rose 4.2%. The median price of homes sold at the metro and state level hit record highs. In January, the median price reached $500,142 on the subway, up 21.1% year-over-year. The median price reached $330,175 in the state, a jump of 11.1%.
Decline in housing affordability
Amid a boiling housing market, housing affordability in Austin fell from 55.5% to 50.3% in the fourth quarter of 2021 after rising 1 percentage point in the third quarter (Chart 6). Housing affordability is defined as the percentage of homes sold that the median income household can afford. Affordability fell nationally from 56.6% to 54.2%. Since the fourth quarter of 2020, housing affordability has declined 19.2 percentage points in Austin and 9.1 percentage points nationwide.
NOTE: Data may not match previously published figures due to revisions.
About Austin Economic Indicators
Questions can be directed to Mytiah Caldwell at [email protected] Austin Economic Indicators is published on the first Thursday of each month.