News & Insights

Migration Momentum: Texas Emerges as Epicenter of U.S. Growth

Texas continues to lead the nation as a primary beneficiary of both business and population migration, the result of pro-growth policies and competitive advantages. Since the onset of the pandemic in early 2020, Texas real GDP has surged by approximately 31%, far outpacing the national growth rate of 23%. This is spurred by the state’s expanding economic footprint and its increasing appeal as a destination for corporate headquarters and skilled labor.

CBRE’s data shows that in 2024 alone California lost 17 corporate headquarters, with 12 of those relocating to Texas. Nearly half of all large interstate headquarter moves for that year — 19 out of 40 — landed in the Lone Star State. The trend is more telling over the period of 2018 to 2024, with three of the top five destination cities in the state of Texas. Many of the companies moving are major players, such as Chevron, X (formerly Twitter), SpaceX, KFC and Realtor.com. This strong and growing corporate presence is one factor behind the launch of the Texas Stock Exchange, planned for next year, as well as the decision by the New York Stock Exchange (NYSE) to move its NYSE Chicago operations to Dallas.

Surveys over multiple years highlight “business climate” as the dominant driver for relocation, particularly among technology and manufacturing companies, which are two of the biggest industry categories relocating. These industries are acutely sensitive to regulation, labor availability, and cost structure — all areas where Texas has advantages.

Texas and Florida have led the nation in net domestic migration since 2020, while states like California, New York and Illinois continue to experience significant outflows. Notably, California surpassed Illinois in 2024 as the leading state for outbound migration. The most frequently cited reason was quality of life, which encompasses cost of living, housing affordability and lifestyle preferences.

These dual flows, capital and talent, reinforce Texas’ economic resilience and position it as a key growth engine for the broader U.S. economy.

Number of Relocations Nationally by Reason

Source: CBRE Americas Consulting

Millennials Frustrated with the Torturous Housing Market

The U.S. housing market remains caught in a tug of war between diminishing affordability and constrained supply. After rising 52% from January of 2020, national home prices posted their third month-over-month decline in May, according to the Case-Shiller Index. While price growth has moderated, median home prices remain elevated — up 2.2% year over year per Case-Shiller, and 2.0% according to Redfin’s more current data.

Affordability remains the challenge for new household formation, due to both the price of homes and interest rates. With the 30-year fixed mortgage rate hovering near 6.7%, monthly housing payments are at historic highs. Homes now stay on the market for a median of 40 days — longer than in prior spring selling seasons — reflecting a mismatch between asking prices and what buyers can afford. The Housing Affordability Index confirms these pressures, showing one of the most challenging environments for homebuyers in decades.

Several fundamental forces are likely to keep a floor under home prices. According to Redfin, homebuying interest has picked up. Inventory levels, while rising, remain historically low —especially when adjusted for population growth. Many current homeowners are effectively “locked in” with ultra-low mortgage rates below 4%, reducing incentive to sell and keeping supply off the market. This ‘golden handcuffs’ effect is unfortunately occurring at the front end of a demographic tailwind, as the largest age cohort in the U.S. today is 33, a prime age for household formation. Combine that with the fact that the median age of a first-time homebuyer has increased from 30 in 2008 to now 38.

Vacancy rates are also low, and there is scant evidence of distress as foreclosures remain subdued and household leverage is generally healthy. With so much equity in their homes as house prices have appreciated, even financially struggling homeowners have little incentive to walk away from their mortgages.

Restoration of a healthy, functioning home sales market could best be achieved by a combination of lower rates, a reinvigorated home building sector and moderation in home prices. While transaction activity may remain muted, particularly if rates stay elevated, we believe there is enough unmet demand to minimize home price declines.

Existing Home Sales Vs. 30-Year Mortgage (Inverted)

Source: Bloomberg

Housing Affordability Near Record Lows

Source: Bloomberg

U.S. Existing Home Inventory and New Home Inventory

Source: Bloomberg

Key Market Indices Performance

About Frost Investment Advisors, LLC

Frost Investment Advisors, LLC, a wholly owned subsidiary of Frost Bank, one of the oldest and largest Texas-based banking organizations, offers a family of mutual funds to institutional and retail investors. The firm has offered institutional and retail shares since 2008.

Frost Investment Advisors' (FIA) family of funds provides clients with diversification by offering separate funds for equity and fixed income strategies. Registered with the SEC in January 2008, FIA manages more than $4.8 billion in mutual fund assets and provides investment advisory services to institutional and high-net-worth clients, Frost Bank, and Frost Investment Advisors’ affiliates. As of June 30, 2025, the firm has $5.3 billion in assets under management, including the mutual fund assets referenced above.

Mutual fund investing involves risk, including possible loss of principal.

To determine if a fund is an appropriate investment for you, carefully consider the fund’s investment objectives, risk, charges, and expenses. There can be no assurance that the fund will achieve its stated objectives. This and other information can be found in the Class A-Shares Prospectus, Investor Shares Prospectus or Class I-Shares Prospectus, or by calling 1-877-71-FROST. Please read the prospectus carefully before investing.

Frost Investment Advisors, LLC (the "Adviser") serves as the investment adviser to the Frost mutual funds. The Frost mutual funds are distributed by SEI Investments Distribution Co. (SIDCO) which is not affiliated with Frost Investment Advisors, LLC or its affiliates. Check the background of SIDCO on FINRA's http://brokercheck.finra.org/.

Frost Investment Advisors, LLC provides services to its affiliates, Frost Wealth Advisors, Frost Brokerage Services, Inc. and Frost Investment Services, LLC. Services include market and economic commentary, recommendations for asset allocation targets and selection of securities; however, its affiliates retain the discretion to accept, modify or reject the recommendations.

Frost Wealth Advisors (FWA) is a division of Frost Bank [a bank subsidiary of Cullen/Frost Bankers Inc. (NYSE: CFR)]. Brokerage services are offered through Frost Brokerage Services, Inc., Member FINRA/SIPC, and investment advisory services are offered through Frost Investment Services, LLC, a registered investment adviser. Both companies are subsidiaries of Frost Bank.

This commentary is as of Aug. 12, 2025, for informational purposes only and is not investment advice, a solicitation, an offer to buy or sell, or a recommendation of any security to any person. Managers’ opinions, beliefs and/or thoughts are as of the date given and are subject to change without notice. The information presented in this commentary was obtained from sources and data considered to be reliable, but its accuracy and completeness is not guaranteed. It should not be used as a primary basis for making investment decisions. Consider your own financial circumstances and goals carefully before investing. Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not indicators or guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. Diversification strategies do not ensure a profit and cannot protect against losses in a declining market. All indices are unmanaged, and investors cannot invest directly into an index. You should not assume that an investment in the securities or investment strategies identified was or will be profitable.

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