September’s numbers may have marked the sixth consecutive month of declining sales, but there were positive indicators in HAR’s recent report too. The high end of the Houston housing market remained hot even as the overall market cooled, and collective inventory continued to grow. Whether you are a buyer, seller, or a real estate professional, this rapidly changing market has surely been keeping you on your toes! Keep reading to learn more about the latest numbers.
Inflation, record-high interest rates, and inventory challenges impacted September’s sales and drove many buyers to lease instead. With mortgage rates eclipsing 6.0 percent for the first time in recent memory and few affordable options priced below $400,000 available, the market has become untenable for some. Single-family home sales fell a whopping 17.0 percent year-over-year in September, with 7,664 units sold compared to 9,235 last year. The market is now behind 2021’s historic sales volume by 5.1 percent.
High-end homes maintained positive sales, with the $500,000 to $1 million segment increasing 12.6 percent and the $1M+ market rising 7.2 percent. One factor in these positive values is that homes across Greater Houston have skyrocketed in value since the start of the pandemic.
The average price of a single-family home jumped 11.6 percent to $414,776. The median price also soared 14.7 percent to $343,950. It’s important to note that both of these numbers are below the record highs established earlier this year. The average price of a single-family home first exceeded $400,000 in March of 2022, and it remains to be seen if or how long this record will hold.
Existing home sales were down 22.8 percent year-over-year, totaling 6,058. The average price of existing homes rose 11.4 percent to $409,384, and the median price jumped 11.9 percent to $330,000. Both figures are well below records established earlier in the year.
Condos & Townhomes
September marked the fourth consecutive month of decline with condo and townhome sales dropping 17.6 percent with 601 sales compared to 729 last September. However, prices continued to rise. The average price rose 7.5 percent to $257,781, and the median price climbed 4.8 percent to $220,000. These figures rest below records set in April 2022.
Inventory in September of 2021 sat at a 2.3-months supply. However, it dropped to a 2.0-months supply in September 2022, reflecting the hot market for condos and townhomes as buyers wait to purchase a standalone single-family home.
Broken out by pricing, here’s how September 2022’s real estate sales performed:
- $1 – $99,999: decreased 31.7 percent
- $100,000 – $149,999: decreased 25.5 percent
- $150,000 – $249,999: decreased 44.7 percent
- $250,000 – $499,999: decreased 11.3 percent
- $500,000 – $999,999: increased 12.6 percent
- $1M and above: increased 7.2 percent
Sales in the $500,000 to $1 million segment jumped 12.6 percent. The $1M+ market was the only other segment to remain in positive territory, increasing 7.2 percent. As prices continue to rise, buyers have been given fewer options in lower priced segments, increasing worries as interest rates inch higher.
To gain a full understanding of the state of the real estate market, it’s valuable to know about how these numbers compare to pre-pandemic levels. Compared to three years ago, September’s sales were up 8.7 percent. Three years ago, the average price was also 38.4 percent lower at $299,600, marking a significant change. Compared to five years ago, sales were 10.0 percent up in September. The average price then was $290,683. In other words, despite massive declines from last year’s record-breaking numbers, this is still a healthy market.
In a minor hit to sellers, Days on Market (the time it takes to sell a home) grew from 29 days to 37 days. However, overall inventory registered a 2.7-months supply in September 2022, up from 1.7 months in September 2021. This represents the largest supply of homes available since July 2020. Nationally, inventory rests at 3.2 months according to NAR®. A 6.0-months supply is generally viewed as balanced. The market is still in sellers’ favor for now.
According to HAR Chair Jennifer Wauhob, “the Houston housing market consists of many concurrent trends. The high end of the market continues to perform well, as is the rental market. But because of a lack of homes priced below $400,000, the market as a whole is slowing to levels we were accustomed to before the pandemic. The most encouraging news of all is the gradual build-back of inventory, which should yield more options for consumers going forward.”
What Does This Mean For You?
Buyers: The market continues to present new challenges to buyers despite rising inventory levels. Inflation and high interest rates have led many prospective buyers to rent instead. Although inventory has jumped, buyers may have difficulty finding their perfect home priced below $400,000 due to inventory shortages among particular price segments. Although the market is gradually evening out to pre-pandemic levels, buyers who can afford to pay a little extra stand to benefit the most from market conditions. A Realtor® can help you to find the best value and negotiate when the time is right.
Sellers: This is no longer the sellers’ market of six months ago. High mortgage interest rates have decreased demand, lengthening the time it takes to sell a home. Such high interest rates also impact sellers if they plan to purchase a new home. However, the market is still seeing homeowners choose to capitalize on increasing home values, as evidenced by rising inventory levels and a rush of new homes to the market. Remember, some homes are more in demand than others. A seasoned real estate professional can help you understand what the sales process might look like for your individual home and how you can make the most out of your sale.
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.