Oil Slump Weighing on Housing Markets in Texas, North Dakota

There’s a dark side to those delightfully low gas prices: Housing markets are slumping in communities that were recently flush from the U.S. shale oil fracking boom.

FILE - In this July 21, 2015, file photo, an oil tanker passes a fisherman as it enters a channel near Port Aransas, Texas, heading for the Port of Corpus Christi. The U.S., seemingly awash in crude oil after an energy boom sent thousands of workers scurrying to the plains of Texas and North Dakota, will begin exporting oil for the first time since the 1973 oil embargo. AP Photo/Eric Gay, File

There’s a dark side to those delightfully low gas prices: Housing markets are slumping in communities that were recently flush from the U.S. shale oil fracking boom.

Home sales are down sharply this year in North Dakota and the West Texas cities of Midland and Odessa. Home sales have also slowed in El Paso and, more recently, in Houston.

The drilling boom, driven by high oil prices and new discoveries, brought tens of thousands of workers to oil fields in several states to run drilling rigs and supply the equipment and services needed to produce crude. Then the price of oil tanked, plummeting by half in late 2014 and reaching levels this year not seen since the financial crisis. Oil companies abandoned drilling projects and began laying off workers.

“When your economic base is undergoing that kind of pressure, your local market is going to feel it,” said Jim Gaines, chief economist at the Real Estate Center at Texas A&M University.

Despite the softer sales, home prices have mostly held up in oil-reliant markets, at least so far.

Still, housing is expected to slow further in Texas and North Dakota next year unless the price of oil rebounds strongly, something that oil companies, government energy analysts, and Wall Street traders do not expect to happen soon.

Housing is expected to slow further in Texas and North Dakota next year unless the price of oil rebounds strongly.