After a long-anticipated cooldown to the Houston real estate market, sales had their first major decline of 2022. However, due to the slowdown in sales and uptick in new listings, inventory reached its highest levels since November 2020. Keep reading for more details from HAR’s latest report.
Single-family home sales fell 8.6 percent year-over-year, marking the third month in a row of sales declines. However, the market is still 1.7 percent ahead of 2021’s historic sales volume.
The $500,000 to $1 million housing category pulled in the highest sales volume, once again fueled by a lack of inventory in lower-priced homes. Notably, the luxury segment declined in sales for the first time in two years, dropping 2.3 percent.
While sales volume may have decreased, year-over-year prices continued to rise. The average price of a single-family home surged 11.0 percent to $436,425, and the median price increased 13.2 percent to a record-breaking $355,000. To put things into perspective, the average price of a Houston home only broke the $400,000 mark in March of 2022, and the median price surpassed $300,000 in May. Homes have gained significant value in a relatively short period of time.
Sales of existing homes were down 11.6 percent year-over-year.
Low inventory, soaring prices, inflation, and rising interest rates have all contributed to the recent changes in the Houston housing market.
Condos & Townhomes
After a long run of positive numbers, townhome and condo sales dipped 15.3 percent year-over-year with 752 closings. Sales of this home type haven’t declined since August 2020.
However, prices were still on the rise in June. The average price jumped 4.7 percent to $259,557, and the median price increased 2.7 percent to $220,000. These figures are both below the record highs set in April of 2022.
With demand for condos and townhomes still hot, it may be no surprise to some that inventory decreased in June. By month-end, levels dropped to 1.7 months. Without a surge of new townhomes and condos to the market, sales may continue to decline.
Broken out by pricing, here’s how June 2022’s real estate sales performed:
- $1 – $99,999: decreased 39.7 percent
- $100,000 – $149,999: decreased 32.5 percent
- $150,000 – $249,999: decreased 47.1 percent
- $250,000 – $499,999: increased 2.4 percent
- $500,000 – $999,999: increased 22.0 percent
- $1M and above: decreased 2.3 percent
A lack of supply in homes priced below $250,000 forced consumers to consider more expensive options, weigh the value of renting, or opt for a condo or townhome instead. Some would-be buyers postponed moving altogether. Pending sales fell 7.7 percent.
However, there is good news for buyers. During the first week of July, mortgage rates on a 30-year fixed-rate loan fell 0.4 percent to 5.3 percent – the largest drop since 2008. While this is still significantly higher than the 2.67 percent interest rate consumers witnessed in December 2020 and even than rates over the course of the last decade, it signals some relief.
Inventory also reached a 2.0-months supply – the highest level since November of 2020. This increase was due in part to an 8.3 percent surge in new listings as sellers took advantage of record-breaking rising home values. The total number of active listings also jumped 27.4 percent.
Although June’s numbers show promise for homebuyers, they also prove that this is very much still a sellers’ market. Traditionally, a 6.0-months supply of inventory is considered a market in which neither the buyer nor seller has an advantage. Days on Market dipped from 30 days to 28 as demand continued to outstrip supply.
The “Close to Original List Price Ratio” for single-family homes also reached 100.1 percent, revealing that most buyers paid above list price to purchase a home. This is the third consecutive month that the COLPR exceeded 100 percent.
According to HAR Chair Jennifer Wauhob, “With strong economic headwinds facing consumers right now, it comes as no surprise that home sales fell in June and may remain below record levels for a while as the market normalizes… The decline in sales was inevitable given the limited supply of homes, record prices, rising interest rates and the pressures of inflation that we’re all feeling every day at the pump, in the supermarket and paying bills.”
What Does This Mean For You?
Buyers: If you’ve been waiting for an influx of new homes to the Houston real estate market to get serious about your search, now might be the time to resume your mission. As fewer buyers enter the market due to tough economic conditions and high interest rates, more options should become available. However, be prepared to spend higher than the asking price. If you’re still on the fence about buying a home in this market, it’s always helpful to connect with a Realtor® who can be there for you when you’re ready to make the leap.
Sellers: Demand continues to outweigh supply in the Houston market, pushing prices higher. This is great news for those who have been thinking about selling to take advantage of historic home values. However, you may not want to wait too long. An increase in active listings and declining sales indicate that the market is cooling. It remains to be seen if an influx in inventory could precipitate price changes in the coming months. A seasoned real estate agent can help guide you through selling your home as the market begins its trek towards stabilization.
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.