El Paso Economy Poised for Moderate Growth in 2026 Amid Affordability Pressures

By Ana Paula Kiyama

El Paso is expected to enter 2026 with steady economic momentum, driven by rising incomes, increased consumer spending, and continued activity in housing and automobile markets, according to new economic forecasts. However, affordability challenges and slowing employment growth remain key concerns for the region.

The outlook is detailed in the “El Paso Top 10 Economic Predictions for 2026” report released by the University of Texas at El Paso’s Border Region Modeling Project, alongside insights from local officials and industry leaders.

Income Growth Fuels Consumer Spending

El Paso’s per capita personal income is projected to rise to $53,200 in 2026, marking continued progress despite remaining below the Texas average of $68,000 and the U.S. average of $78,700. Economists say the increase reflects resilience in the local economy amid national and state-level uncertainty.

“Although El Paso continues to lag behind the rest of Texas and the U.S., the upward trend is meaningful,” said Tom Fullerton, professor of economics at UTEP. “Despite policy headwinds, income levels in El Paso are still climbing.”

Higher earnings are expected to translate into stronger consumer spending, particularly in housing and vehicle purchases.

Housing Market Shows Signs of Improvement

The local real estate market is forecast to become slightly more affordable in 2026 as mortgage rates ease and residential construction increases. Total housing starts are expected to exceed 2,600 units, the highest level since the pandemic.

Median prices for newly built single-family homes are projected to surpass $267,900, while resale homes are expected to reach $255,500. Moderately lower mortgage rates could bring average monthly principal and interest payments just below $2,120, improving affordability for qualified buyers.

Existing home sales are projected to reach nearly 11,700 units, marking the first annual increase since 2022.

Local Realtors report a more balanced market compared to recent years. While sellers continue to hold an advantage, buyers now have greater room for negotiation as inventory grows.

Confidence among homebuilders, however, remains cautious. Rising land, labor, material, and regulatory costs continue to pressure new construction, potentially limiting long-term supply.

Vehicle Sales Rise as Residents Earn More

Rising incomes are also expected to boost vehicle demand. El Paso County automobile registrations are projected to reach nearly 731,000 in 2026, up from approximately 719,000 in 2025.

With new vehicle prices averaging above $50,000 nationwide, dealerships are increasingly focusing on affordable used vehicles to meet local demand.

“Affordability is the biggest issue,” said Ronnie Lowenfield, CEO of Casa Auto Group. “When wages go up, we see more business—but customers are still very price conscious.”

Employment Growth Slows

Despite gains in income and spending, employment growth in El Paso is expected to slow. The county’s unemployment rate is projected to rise modestly to 4.9%, still considered healthy by historical standards.

Manufacturing, construction, and energy are expected to generate the most job growth in 2026, though concerns remain about workforce readiness. Local workforce leaders warn that younger workers may face fewer entry-level opportunities due to automation and artificial intelligence, while older workers without digital skills could struggle to transition into new roles.

City officials describe the 2026 outlook as one of cautious optimism. Investments in infrastructure, job training, and neighborhood services remain a priority, with a focus on ensuring that economic growth translates into improved quality of life.

Economists note that total commercial activity in El Paso is expected to surpass $20 billion for the first time, underscoring the region’s long-term economic expansion.

While affordability, labor costs, and workforce adaptation remain challenges, El Paso enters 2026 on stable footing, supported by rising incomes, resilient consumer demand, and gradual gains across key sectors.