August marked the fifth consecutive month of declining sales, boosting the number of listings on the market. Rather than purchase a home, many would-be buyers opted to rent instead. The reduction in competition and increase in inventory are good news for anyone actively looking to own a new home. Read on to learn more from HAR’s recent report.
Amid concerning economic factors such as rising interest rates and inflation, many buyers took a break on their home searches in August. Single-family home sales dropped 16.9 percent year-over-year, with 8,241 units sold. This represents the lowest monthly sales volume since February 2022. Year-to-date, the market is currently 3.7 percent behind 2021’s blazing pace.
All housing segments aside from the $500,000 to $1 million sector saw negative sales. With low inventory among lower-priced homes still posing a challenge, this segment grew a healthy 10.0 percent. The smallest decline noted was among homes priced between $250,000 and $500,000, which dipped 10.6 percent.
Despite a decrease in sales volume, prices continued to rise. The average price of a single-family home jumped 8.7 percent year-over-year to $411,671. However, it is worth mentioning that this value is far below the record high of $438,591 achieved in May of 2022. The median price also soared 10.8 percent to $341,950 – below the all-time record high of $354,440 set in June of 2022.
For reference, the average price of a single-family home first breached $400,000 in March of this year. The median price of a single-family home has remained above $300,000 since May of 2021.
Existing single-family home sales fell 20.3 percent year-over-year with 6,739 sales. The average price for these homes ticked up 8.8 percent to $408,030, and the median price climbed 8.9 percent to $330,000. Both values are well below records established earlier this year.
In case you’re curious what the numbers look like compared to pre-pandemic levels, August sales were down 5.0 percent compared to August 2019. The median price at that time was 36.8 percent lower ($249,975), and the average price was 32.7 percent lower ($310,139).
Comparing even further back to August of 2017, sales were up 35.5 percent. However, it should be noted that 2017’s figures were impacted by Hurricane Harvey.
Condos & Townhomes
Sales of condos and townhomes decreased for the third consecutive month, dropping 14.9 percent year-over-year. However, the average price jumped 7.2 percent to $254,383, and the median price climbed 8.1 percent to $217,000. Both figures are below the record milestones established in April 2022.
If buyers found it difficult to find a condo or townhome in August, they wouldn’t be alone. Inventory sunk from a 2.4-months supply down to 2.0 months. Demand for this property type is still high, and new listings are needed to replenish the market.
Broken out by pricing, here’s how August 2022’s real estate sales performed:
- $1 – $99,999: decreased 28.1 percent
- $100,000 – $149,999: decreased 24.4 percent
- $150,000 – $249,999: decreased 43.6 percent
- $250,000 – $499,999: decreased 10.6 percent
- $500,000 – $999,999: increased 10.0 percent
- $1M and above: decreased 13.5 percent
Overall indicators were mixed in August. In addition to the decline in sales volume, the total dollar volume of sales plummeted. Pending sales also dropped 11.0 percent. In another potential blow to sellers, the Close to Original List Price Ratio remained below 100 percent, revealing that fewer buyers are purchasing homes above list price.
Days on Market, the time it takes to sell a home, also grew from 27 to 31 days. While this number is still far from a lengthy average sale time, the higher number reflects shifting market conditions.
In August, the total number of available properties skyrocketed 31.1 percent, providing relief to prospective buyers who had fewer options not too long ago. Months of inventory reached a 2.5-months supply, the highest level in two years. Nationally, inventory rests at a 3.3-months supply, inching closer to the 6.0-months supply level that would indicate a balanced market. In other words, although conditions are improving for buyers, it is still a sellers’ market.
According to HAR Chair Jennifer Wauhob, “We are easing our way back to the housing market that existed prior to the pandemic. For the past two years, Houston housing has been like a runaway train, and what we’ve been seeing most recently is an engineer, finally at the throttle, applying the brakes so the train can pull safely into the next station. It’s important to note that transactions are still happening, just not at a whirlwind pace or record pricing levels, and that is perfectly healthy.”
What Does This Mean For You?
If you’ve had difficulty searching for a home this year due to low inventory, you’ll be happy to know that inventory is slowly increasing. With many buyers priced out of the market due to rising interest rates, this could be a good opportunity to renew your search. However, you may still face a challenge with both competition and inventory, especially if your price point is below $500,000. Reach out to a Realtor® to advise and guide you in your home search and keep you abreast of listings that meet your criteria.
The market is continuing to cool, but conditions remain in your favor for now. Although your property may not command an over-asking price, demand is still high, especially for properties priced below $500,000. However, the changing economy and housing market have sparked many homeowners to make the decision to sell, giving buyers more options – and creating more competition for you. As demonstrated by an increasing Days on Market value, quick sales aren’t what they used to be, but they’re still generally quite short. Prices also continue to soar, so you may still profit well on the sale of your home. Keep in mind that changing conditions often bring some uncertainty, particularly about pricing. Talk to a Realtor® to better understand how your home compares to those in your neighborhood and what price you may be able to ask for it.
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.