Real estate continued to perform well in May despite rising mortgage interest rates and prices again soaring to new record highs. Individuals and investment companies purchased homes nearly as quickly as they were listed! However, there was some good news for buyers in HAR’s most recent report. Let’s take a look at the numbers.
Year-over-year, the volume of single-family home sales was down one percent. Year-to-date, the market is running 4.4 percent ahead of 2021’s record-breaking volume, so it remains to be seen if this trend will continue for the rest of 2022.
Higher-end homes again led the way in sales, pushing pricing to new record levels.
The median price jumped 16.0 percent to $351,000, and the average price soared 14.3 percent to $440,670. For reference, these numbers are roughly $7,000 and $14,000 higher than in April 2022, respectively.
The average price only broke the $400,000 mark in March of 2022, making this a significant increase in a short period of time.
Sales of existing single-family homes totaled 7,902 in May.
Condos & Townhomes
Would-be buyers continued to turn to condos, townhomes, and rentals in May as prices maintained their rapid inclines. The volume of townhome and condo sales rose 0.4 percent year-over-year, tallying just three additional sales from May 2021. The average price jumped 14.4 percent to $272,381 – a decrease from April’s pricing. The median price soared 8.8 percent to $229,000 but is also below the record highs established last month.
Inventory in the condos and townhomes market continues to tighten. By the end of May, inventory rested at only 1.4 months. At the same time last year, inventory sat at a 2.4-months supply.
Broken out by pricing, here’s how May 2022’s real estate sales performed:
- $1 – $99,999: decreased 35.7 percent
- $100,000 – $149,999: decreased 27.6 percent
- $150,000 – $249,999: decreased 43.3 percent
- $250,000 – $499,999: increased 10.7 percent
- $500,000 – $999,999: increased 38.3 percent
- $1M and above: increased 30.2 percent
A dearth of homes priced at $250,000 and below contributed to the sharp declines in sales within those sectors. Buyers have been forced to turn toward more expensive properties, adding a new level of complexity to searching for a home.
Homes priced between $500,000 and $1 million again dominated sales with a 38.3 percent year-over-year gain. The luxury segment consisting of homes priced at $1 million and above also performed well, registering a 30.2 percent increase. In third place, the $250,000 to $500,000 segment registered a 10.7 percent rise in sales volume.
Of all of HAR’s metrics for May, only total property sales and single-family home sales saw declines. Total dollar volume soared 12.0 percent to an amazing $4.9 billion. To put this into perspective, this is nearly equivalent to the GDP of a small nation!
There’s also good news for buyers: Active listings skyrocketed 14.9 percent as new listings entered the market. Summer is often a good time for many to sell, and record sales prices have certainly enticed those thinking of making a change to take the leap and sell their home.
Inventory reached a 1.6-months supply, the highest level since October 2021 when levels were at 1.7 months. According to the National Association of Realtors® (NAR), inventory stands at 2.2 months nationally. A 6-months supply is typically considered a balanced market in which neither buyers nor sellers have a clear advantage.
Mortgage rates are also still on the rise, pushing some buyers out of the market for now. As of June 7, the average rate for a 30-year fixed rate mortgage was 6.059 percent.
The “Close to Original List Price Ratio” for single-family homes reached 100.9 percent, the highest number in Houston’s records. The majority of buyers have paid above list price to purchase a home. Last month, the COLPR was 100.6 percent, signaling a trend in rising prices.
Days on Market – the time it takes to sell a home once it hits the market – sunk year-over-year from 35 days to just 29. Because of this, sellers should make haste to arrange for their next steps once their home is listed.
According to HAR Chair Jennifer Wauhob, “Conditions appear to be calming a bit across the Houston housing market, so we are not seeing the frenetic pace of buying we did a couple of months ago with dozens of competing offers on new listings… Hopefully we can begin to see signs of normalcy in terms of supply, demand, and pricing in the months ahead.”
What Does This Mean For You?
Buyers: Although the market is still tight, gradually cooling sales may mean that relief is on the way. An influx of new homes to the market may reduce competition, making it easier for you to find a home that’s within your budget. However, before you get too excited, remember that everyone looking for a home wants the best deal. An experienced Realtor® can help you find a home that ticks off your most important boxes without breaking the bank. A Realtor® can also assist you in closing on a home fast so that you don’t miss out on great opportunities. Even though market conditions appear to be improving, there still remains a lack of homes within certain segments, making it important to have an expert on your side.
Sellers: Did the sharp increases in average and median sales prices make you gasp? If so, you’re not the only one. Strong demand has led many homeowners to rethink their housing situations. If you’re ready to downsize, plan on relocating, or are open to renting until the market cools, you have the potential to make big bucks on the sale of your home. With rising interest rates, improving inventory levels, and ever-soaring inflation, many homeowners who have been on the fence about selling are now moving forward in case the market begins to shift. A real estate agent will help you understand the value of your home in this hot market so that you can make the most educated decision. With homes selling for higher than listed, you might be shocked by the numbers!
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.