Houston’s Housing Market on Track for a Record Year

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Despite unrelentingly low inventory levels, buyers kept the market busy in September. In fact, according to the Houston Association of Realtors® (HAR), Houston is positioned to have a record year in sales. Keep reading to learn more about how real estate performed in September.

Single-Family Homes

Single-family home sales were up 1.5 percent compared to last September, and in total, 9,226 units sold. Year-to-date, home sales are 15.3 percent ahead of 2020’s breakneck pace.

Interestingly, the HAR Multiple Listing Service (MLS) recently redefined the luxury market as homes valued at $1 million and above. The segment was previously defined as homes valued at $750,000 and higher. Even with this change, the luxury market dominated in sales with a 34.6 percent year-over-year surge. The $500,000 to $1 million segment also did quite well, rising 28.3 percent. Properties priced $250,000 to $500,000 saw sales rise a massive 27.4%.

The average single-family home price shot up 13.4 percent year-over-year to $372,408. The median price also jumped 13.3 percent to $300,000. While the year-over-year data is certainly interesting, buyers and sellers are sure to be curious about what these numbers mean for current trends in pricing. Overall, pricing has moderated after reaching impressive highs in June.

Sales of existing single-family homes totaled 7,948 in September. That’s an increase of 8.7 percent from the same month last year. The average price of existing single-family homes ticked up 12.8 percent to $368,253, and the median sales price increased 15.7 percent to $295,000.

Condos & Townhomes

The market for townhomes and condos is still strong! Sales increased for the 13th consecutive month in September, soaring 11.7 percent. There were 727 closed sales in September versus 651 the year prior.

If you’re in the market to buy or sell, you should be aware that the average price rose 12.1 percent year-over-year to $240,994. The medium price also jumped 17.6 percent to $210,000. Although these numbers show a decrease in price from record highs in June, the change isn’t terribly significant. For reference, the average price of a townhome or condo was $245,160 in June of 2021.

As proof of how hot the market is for condos and townhomes in Houston, inventory fell from 3.9-months’ supply to just 2.4 months. This means that if no new townhomes and condos went up for sale, existing inventory would only last 2.4 months. In June, inventory levels sat at 2.5 months as sellers prepared for summer moves.

Leases & Rentals

While the rest of the housing market performed quite well, Houston’s rental market slowed in September as rent prices continued to creep up. Leases of single-family homes fell 8.2 percent year-over-year. Leases of townhomes and condos also declined 1.8 percent.

Despite these dwindling numbers, the average price to rent a single-family home jumped 9.0 percent to $2,115. The average price to lease a townhome or condo soared 6.3 percent to $1,793.

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A staggering total of 11,285 properties sold in September. This represents a 1.6 percent year-over-year increase in sales of all property types. Supported in part by the popularity of luxury homes, total dollar volume skyrocketed 16.9 percent to $4 billion.

Broken out by pricing, here’s how September’s sales performed:

  • $1 – $99,999: decreased 32.3 percent
  • $100,000 – $149,999: decreased 36.9 percent
  • $150,000 – $249,999: decreased 31.7 percent
  • $250,000 – $499,999: increased 27.4 percent
  • $500,000 – $999,999: increased 28.3 percent
  • $1M and above: increased 34.6 percent

As mentioned earlier, the definition of a luxury home has now changed. Previously defined as a home valued at $750,000 or more, a luxury home is now considered to be valued at $1 million or higher.

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Compared to September 2020, it took about three weeks less to sell the average home. The Days on Market (DOM) value dropped from 51 to just 29, further evidence of a bustling real estate market.

The current national inventory level rests at 2.6 months as recently reported by NAR®. However, inventory in Houston registers at just a 1.8-months’ supply compared to 2.4 months in September of 2020. While a 1.8-months’ supply certainly doesn’t paint a rosy picture for eager buyers, this is actually the highest inventory level of 2021!

According to HAR Chairman Richard Miranda, “The Houston housing market continues to show strength as we enter the fall season, which is traditionally the time of year the market slows.” He goes on to say: ““We are on track for another record year of sales, however higher home prices and the potential of rising interest rates could impact buyer demand in the coming months.”

It’s clear that the market is performing unusually well for the start of the fall season. The question now is: Will this pattern of spectacular sales numbers persist through the end of the year?

What Does This Mean for You?

Renters: With the price to rent a home often exceeding the price of a monthly mortgage, there is no doubt that renters have it tough right now. Despite the declining number of closed leases, prices just keep soaring. If your plan necessitates a rental, make sure you know what you are looking for. A Realtor® can help you fine-tune your wants and needs so that you don’t end up paying more than you’d like to. It is also their job to know about various Houston neighborhoods. You may be leaving a neighborhood out of your consideration that would actually be perfect for you. A Realtor® can help you find the right home at a price you can accept.

Sellers: Even though inventory levels are still quite low, prices are generally leveling out. This means if you sell your home now, you may get less for the sale than if you had sold your property earlier in the year. However, shrinking Days on Market values and stiff competition for what amounts to few homes on the market means that Houston’s real estate is still a seller’s market. If you’re not sure how to properly price your home in rapidly changing conditions, it’s best to give a Realtor® a call.

Buyers: The good news first: Prices are slowly dipping. The bad news? Inventory levels still pose a challenge for eager homebuyers despite inventory being at its highest levels of 2021. While it may be easier to purchase a home now than it was previously in the year, you’re still going to want some help from a real estate professional. With prices fluctuating, you could easily end up paying more for a new home than you ought to. The competition between buyers is still fierce, and good homes sell fast! Don’t miss out on the home of your dreams. Enlist the help of a seasoned Realtor®.

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 happen.