Dive Brief:
- As the country sees significantly lower oil prices, North Dakota and oil-reliant areas in Texas are experiencing plummeting home sales as oil drilling activity dwindles, according to the Associated Press.
- Home sales in all of North Dakota (-6.3%) and the Texas cities of Midland (-8%), Odessa (-10.6%), El Paso (8.8%) and Houston are feeling the pinch; however, home prices are still holding up for the time being.
- The tens of thousands of workers who flooded North Dakota and Texas for plentiful oil industry jobs found themselves looking for work in other industries or collecting unemployment, the AP reported, after the price of oil dropped by more than half in 2014-2015. According to the Labor Department, the energy and mining sector lost 122,300 jobs last year.
Dive Insight:
The U.S. oil boom took off at the end of the 2000s when drillers increased the amount of oil that could be extracted from underground shale rock formations via the process commonly known as fracking.
Although the region’s oil industry has been in a downward trajectory since oil prices began to fall, home prices in Texas hit a record high in the second quarter of 2015, according to the Texas Quarterly Housing Report. Home sales increased by 46.3% from the first to second quarter, the report found, and 4.7% year over year. The median price of a home in Texas also increased by 8.1% from the first quarter and 9% from the prior year. However, it looks as if the oil bust has finally caught up with home sales.
"When your economic base is undergoing that kind of pressure, your local market is going to feel it," Jim Gaines, chief economist at the Real Estate Center at Texas A&M University, told the AP.
However, there is a bright side for the construction industry: Experts surmise that workers exiting the energy and mining sector are making their way to construction. The construction industry is still in the midst of a skilled labor shortage, even with those returning workers, according to experts.
