After a whirlwind 13 months of positive sales that were interrupted by July’s lagging numbers, HAR has released the much-anticipated sales numbers for August. The results? Prices show signs of flattening out, inventory is improving, and sales volume increased. What does this spell out for the future of the real estate market in Houston? Let’s get into all the details.
Single-family home sales shot up 8.5 percent year-over-year, with 9,890 units sold. In August 2020, 9,118 single-family homes sold. The gains are partly due to an increase in new listings and growing buyer demand. In fact, demand never really slumped at all in July this year – the month’s numbers appeared lower due to a statistical anomaly! Year-to-date, Houston home sales are 17.4 percent ahead of 2020’s rapid pace.
Homes priced from $500,000 to $750,000 led the pack in sales volume with a whopping 48.5 percent increase year-over-year. The $250,000 to $500,000 segment also saw great sales numbers and rose 31.8 percent. Sales in the luxury segment (homes priced at $750,000 and higher) soared 30.5 percent year-over-year.
The average price of a single-family home jumped 14.0 percent to $380,223 while the median price ticked up 15.2 percent to $310,000. Although these are still year-over-year increases we’re talking about here, it’s important to note that these prices are lower than the record highs of June 2021.
The total dollar volume of single-family home sales also rose in August. While pending sales jumped 8.9 percent, the number of total active listings fell 14.4 percent. Despite the year-over-year decrease in the number of active listings, inventory reached a 1.9-months supply. This number represents the largest supply of homes the market has seen so far in 2021. Nationally, housing inventory stands at a 2.6-months supply, according to the National Association of Realtors® (NAR).
Condos & Townhomes
The market for townhomes and condos is still hot in Houston. Sales surged for the twelfth consecutive month, skyrocketing 27.1 percent. Compared to August last year, 172 more condos sold. The average price increased 9.5 percent to $237,473 while the median price rose 14.3 percent to $200,000. Like standalone single-family homes, these values actually represent a decrease in the average price as we make our way through the remainder of the year. Year-over-year prices don’t always tell the whole story! The average price of a townhome or condo was $245,160 in July 2021.
Inventory levels of this property type have remained frustrating for buyers. Year-over-year, inventory fell from a 4.0-months supply to 2.5 months. This is also lower than July 2021’s 2.6-months supply.
Leases & Rentals
As has been the story for some time now, rent prices just seem to keep ticking up. However, as expected, increased price demands have impacted consumer demand among certain segments. Single-family home leases dropped 10.2 percent compared to last year. The average rent for a single-family home jumped 9.6 percent to $2,153, a very slight dip from July’s average price.
However, leases of townhomes and condos are actually up 1.8 percent. The average price to rent out a townhome or condo was $1,765, a 6.9 percent increase year-over-year and a slight increase over July’s numbers.
With summer behind us, it’s no surprise that numbers seem to be leveling out. August’s sales still performed incredibly well, however. Is HAR’s report a window into what we can expect for the fall season? While we can’t be certain, a potential change in the market is something to keep an eye on.
Factoring in all property types, sales shot up 9.2 percent year-over-year, totaling 12,036 properties. Total dollar volume also increased 26.7 percent to $4.3 billion.
Broken out by pricing segment, here’s how August’s sales performed:
- $1 – $99,999: decreased 32.4 percent
- $100,000 – $149,999: decreased 33.5 percent
- $150,000 – $249,999: decreased 26.6 percent
- $250,000 – $499,999: increased 31.8 percent
- $500,000 – $749,999: increased 48.5 percent
- $750,000 and above: increased 30.5 percent
If you’re looking to sell a home fast, we’ve got good news: the time it took to sell a home in August 2021 was nearly half of what it was in August 2020. Year-over-year, Days on Market (DOM) fell from 51 to 26, identical to July 2021’s rapid pace.
Sales of existing homes totaled 8,584 in August, up 14.7 percent from August last year.
We’ve also got some great news for buyers. In June, the Close to Original Price Ratio for single-family homes rested at 100.3 percent – the highest ever – with the lion’s share of buyers paying above list price. This made it challenging for buyers searching for a new home as it typically wasn’t clear how much they would actually end up paying. However, in August, the Close to Original Price Ratio sunk to 99.6 percent, bolstering reports that the market is leveling.
“The Houston housing market is beginning to show signs of easing, which was to be expected with summer behind us, schools back in session, and inventory levels still exceptionally low, albeit improving,” said HAR Chairman Richard Miranda. “We are also hearing anecdotally that there aren’t quite as many competitive bids on property listings as we observed earlier this year, which drove prices into record territory in June.”
What Does This Mean for You?
Renters: If you’re interested in renting a single-family home, you may have to tolerate the seemingly ever-soaring prices. However, if you’re a landlord, you may have some trouble filling vacancies as a result of consumer frustration with such high pricing. It’s quite possible that in the coming months, this housing segment could see some changes. The cost to rent a townhome or condo also increased in August. Depending on your budget and goals, it may be worth talking to a seasoned Realtor® about home ownership instead.
Sellers: With the market appearing to cool off, now is the time to list your home if you’re on the fence. You can still get top-dollar if you have what consumers are looking for. Inventory levels are still low, but this advantage could be evened out by dips in demand as we go into the fall season. To ensure you’re pricing your home as competitively as possible without going overboard, it can be helpful to work with a real estate agent who is familiar with your neighborhood and everything it has to offer.
Buyers: If you’ve had your eye on the market and have been waiting to make a move, it might be time to get back into the game. Although Days on Market (DOM) is just a shocking 26 days, meaning that homes are still selling at a rapid clip, prices do appear to be improving. It will be interesting to see how other interested buyers react to potential market changes! To get a jump on the competition without overpaying, consider working with an experienced Realtor® who knows the market well and can move quickly.
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.