The temperature wasn’t the only thing to cool off in October – real estate sales did, as well. This was only the second month of decline in 2021, with the first slowdown being largely due to a technicality in July following the prior year’s rush to closings during the beginning of the pandemic. This time, however, the decrease in sales appears to be a result of buyer frustration. Low inventory is making it difficult to find the perfect home at a desirable price, so some buyers have decided to wait until the market opens up. What does this spell out for the remainder of 2021? Let’s get into the details.
Single-family home sales declined 5.2 percent compared to last October, with 8,703 homes sold. In October of 2020, 9,183 single-family homes sold. While these new numbers might be a bit disappointing, keep in mind that year-to-date, local home sales are up 12.9 percent when compared to 2020. This year has also blown 2019 out of the water with a 21.6 percent increase in sales. Real estate is cyclical and seasonal, and we often see a slight downtick in sales during the cooler months. Keeping this in mind, this decline isn’t a huge red flag.
Sellers will be keen to know that single-family home prices appreciated yet again! The average price jumped 13.1 percent to $377,631, while the median price soared 14.7 percent to $305,000. Both prices are records for any month of October, but it’s worth noting that these numbers are well behind the all-time highs set in June 2021. Homes priced from $500,000 to $1 million led overall sales volume for the month, winning a 23.1 percent year-over-year increase. The luxury market, newly defined as homes priced $1 million and higher, saw a healthy 20.4 percent gain. The $250,000 to $500,000 market also skyrocketed 17.5 percent.
Total property volume of single-family home sales dipped 3.1 percent year-over-year, totaling 10,756. However, percentages don’t tell the whole story. Soaring home values contributed to a total dollar volume of $3.8 billion for October, an increase of 9.9 percent year-over-year!
Pending sales jumped 8.2 percent, which could be good news for next months’ sales numbers. But don’t be too quick to celebrate – the total number of available properties remains down 11.4 percent compared to 2020. The buzzing market earlier this year saw record home sales with few new homes to add to the market, a pinch that is making it increasingly difficult for Houston homebuyers.
However, consider this: October’s home inventory reached a 1.8-months supply. Sound low? It depends on how you look at it. It’s less than last year but is actually the highest level of 2021. On the other hand, national housing inventory rests at a 2.4-months supply, making Houston’s inventory level considerably lower. Not only are Houstonians moving within the area, but people all across the country are leaving their homes in droves to live in the Bayou City. It’s the #1 destination for people relocating from Los Angeles, for example. Houston features several highlights including an abundance of jobs, affordable homes, and an incredibly diverse culture. The next time you have a new neighbor, ask where they’re from! The answer may be anywhere but local.
Condos & Townhomes
Despite shrinking numbers for standalone single-family home sales, the market for townhomes and condos surged. Sales increased for the 14th consecutive month! The average price leapt 12.6 percent to $247,846 and the median price climbed 23 percent to $219,000.
With the popularity of this home type has come some measure of frustration. Year-over-year, inventory sank from a 3.9-months supply to 2.3 months. This is even less than the summer’s inventory levels!
Leases & Rentals
Single-family home leases dropped 3.4 percent compared to last year as rents ticked up 9.7 percent to $2,092. Leases of townhomes and condos increased 1.3 percent despite the average rent shooting up 7.3 percent to $1,712. There’s no doubt that townhomes and condos are having a moment, and their popularity may be contributing to the increase in rental prices.
With less than stellar inventory levels all around, buyers seem to have taken a break in October. But inventory levels aren’t the only factor in October’s sales numbers. According to HAR Chairman Richard Miranda, “Housing markets move in cycles, especially after churning at record levels for months on end… Existing home sales were actually flat in October while new construction declined, and that is most likely the result of the supply chain interruptions and labor shortages that have affected homebuilding across the country.”
Broken out by pricing segment, here’s how October’s sales performed:
· $1 – $99,999: decreased 20.8 percent
· $100,000 – $149,999: decreased 42.3 percent
· $150,000 – $249,999: decreased 39.1 percent
· $250,000 – $499,999: increased 17.5 percent
· $500,000 – $999,999: increased 23.1 percent
· $1M and above: increased 20.4 percent
Compared to last October, it took about two weeks less to sell a home in October 2021, with Days on Market (DOM) falling to 32. Overall, the average sales price increased 13.2 percent to $374,317, and the median sales price jumped 15.4 percent to $299,000.
What Does This Mean for You?
Renters: Unfortunately, prices seem to be continuing their upward trend, with townhomes and condos being particularly popular choices. If you’re interested in renting in Houston, you might want to move fast to get the kind of unit you’re looking for. Landlords, if you’re having difficulty renting a unit out, consider lowering the price to attract more renters. Whether you are in the position of looking for a new rental or looking to rent out a unit, a Realtor® can help.
Sellers: The market is in desperate need of new inventory, and generally, appreciation values have skyrocketed. If you own a newer home, buyers may be particularly interested in what you have to offer since supply chain issues have slowed new construction. Whether you bought your home a year ago or ten years ago, it’s worth having a conversation with a Realtor® about how your home might perform on the market.
Buyers: Did you notice the part where we said other buyers might be backing off? Single-family home inventory was the best it’s been all year in October, and decreased competition means that you really do stand a better chance of landing the home you’re looking for. The market is still very competitive, but if you have the will left after a long stretch of home-searching, it might pay off. If you’re in the market for a condo or townhome, don’t wait before making the call to view a home that catches your eye. It’s important to move fast, and by working with a seasoned real estate agent, you may get the inside scoop on homes just about to enter the market. In a hot market, that’s a real advantage.
Have questions about renting, buying, or selling in Houston and the near-town areas? Get in touch with Circa Real Estate. They’d love to chat with you about how to make your real estate dreams a reality.