Houston’s real estate market performed well in April, but for the first time in 2022, sales volume did not beat the previous year’s records. This comes as low inventory, rising interest rates, and record-high pricing put pressure on homebuyers. So, how might this affect you? Let’s take a look at the numbers from HAR’s most recent report.
Single-Family Homes
Year-to-date, sales of single-family homes have run 7.4 percent ahead of 2021’s record-setting volume. However, on a year-over-year basis, statistics registered a 0.2 percent decline. This amounts to just 21 fewer home sales in April of 2022. With economic conditions weighing on buyers at levels they have not in previous years, the slight decline still speaks to the hot demand for single-family housing in Houston.
Demand for higher-end homes continued to push pricing to historic heights. The median price jumped 16.6 percent to $343,990, and the average price soared 14.9 percent to $426,061. These represent new record highs and the second time in history that the average price of a single-family home rose higher than $400,000! The first time was in March of 2022.
Sales of existing single-family homes totaled 7,296, an increase of 0.8 percent compared to April of last year. The average price of existing homes rose 15.3 percent to yet another record high of $429,620. The median sales price also jumped 15.8 percent to a historic high at $337,500.
Condos & Townhomes
The volume of townhome and condo sales rose 3.4 percent year-over-year as demand continued to grow. The average price surged 11.6 percent to $273,575 while the median price rocketed 17.5 percent to $234,950. These numbers both represent the highest pricing figures of all time for this segment.
By the end of April, inventory rested at 1.5 months – a little better than in March, but only by 0.1 months. At the same time last year, inventory sat at a 2.6-months supply.
Leases & Rentals
The lease market saw a mixed performance in April. While single-family rentals increased 17.2 percent year-over year, leases of townhomes and condos declined 3.0 percent. The average cost to rent a single-family home jumped 10.2 percent to $2,164 while the average price to rent a townhome or condo soared 8.4 percent to $1,831. With the cost to lease a townhome or condo steadily creeping up to the prices one might see to rent a single-family home, some renters are opting to lease a single-family instead.
Overall
Broken out by pricing, here’s how April 2022’s real estate sales performed:
- $1 – $99,999: decreased 6.8 percent
- $100,000 – $149,999: decreased 15.5 percent
- $150,000 – $249,999: decreased 44.7 percent
- $250,000 – $499,999: increased 13.5 percent
- $500,000 – $999,999: increased 45.0 percent
- $1M and above: increased 24.9 percent
Homes priced between $500,000 and $1 million registered the largest sales increase with a massive 45.0 percent gain. The luxury market (homes priced at $1M and above) came in second place with a 24.9 percent increase. Homes priced between $250,000 and $500,000 registered at third place with a sales volume increase of 13.5 percent.
The lack of available homes priced below $250,000 has forced homebuyers to consider more expensive homes, contributing to these numbers. However, with mortgage rates growing at the fastest rate in 40 years in an effort to reduce inflation, it remains to be seen how future sales volume will be affected.
The “Close to Original List Price Ratio” for single-family homes reached 100.6 percent, the highest value in Houston’s history. This means that most buyers paid above list price due to bidding wars or other reasons.
Days on Market – the time it actually takes to sell a home – sunk year-over-year from 40 days to just 33. This is good news for sellers hoping for a quick sale.
Inventory remained low at a 1.4-months supply. Nationally, inventory stands at a 2.0-months supply. While this is bad news for buyers, it puts sellers in a strong position.
According to HAR Chair Jennifer Wauhob, “Contrary to what some people think, we do actually have new listings hitting the market, but they are selling exceptionally quickly and at some of the highest prices of all time as buyers and investors make cash offers well above asking price to beat back their competition. Consumers have grown increasingly weary of the buying frenzy and many are considering postponing their purchasing plans because pricing and interest rates have exceeded their reach. Unfortunately, we don’t anticipate conditions to improve anytime soon.” Active listings grew 5.2 percent.
Overall, the sales of all property types were flat. Despite this, the total dollar volume soared 14.5 percent year-over-year to $4.5 billion.
What Does This Mean For You?
Buyers: Despite rising mortgage prices, buyers are still paying higher than asking due to low inventory, high demand, and competition from investors and parties willing to pay in cash. These challenges make it even more important to work with a Realtor® who knows the market well so that you don’t miss out on opportunities.
Sellers: The market remains in sellers’ favor. Strong demand, rising prices, and low inventory mean that sellers can stand to earn big from a successful sale. However, if you intend to remain in Houston, the issue of purchasing a new home could become a problem. Looking outside of your preferred community, downsizing, or temporarily renting are all possible solutions. Work with an experienced real estate agent to see what your options are so that you can make the most of these historic sales prices.
Renters: The cost to rent continued to soar in April, with the cost to rent a townhome or condo creeping closer to single-family rental prices. As homebuyers take breaks due to fatigue, low inventory levels, and economic conditions, many have turned to leasing. However, just because prices are increasing overall does not mean that you can’t still find a great deal. Talk to a Realtor® about what you’re looking for. A good one will know all about the newest listings so you can jump on the perfect unit.
Have questions about renting, buying, or selling in the Houston and 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.