Sales continued to decline as inventory rose in October, marking the seventh month in a row of dampening sales. However, there was good news for some in the real estate market in HAR’s recent report. Keep reading to learn more about the latest numbers and how they may affect you.
Soaring interest rates and high home prices challenged homebuyers in October, contributing to sales falling 22.8 percent. On a year-to-date basis, Houston’s market is now behind 2021’s historic volume by 6.7 percent. Unlike during previous months, HAR’s report revealed that sales dipped among all housing segments. Homes priced between $500,000 and $999,999 registered the smallest decline in sales at 6.6 percent. With few homes available priced below $250,000, many consumers have chosen to wait out the market by renting instead.
The average price of a single-family home increased 7.2 percent to $403,712, well below the record high of $438,290 established in May and more than $10,000 less than the average price registered in September. The average price of a single-family home first broke $400,000 in March of 2022. The median price jumped 8.4 percent to $330,500, which is nearly $25,000 less than the highest median of all time set in June 2022. While some variation in pricing throughout the year is normal, it does appear that the cooling has become a trend.
Existing home sales dropped 30.4 percent year-over-year, totaling 5,021 in October. The average price for existing homes rose 5.9 percent to $395,627, and the median price increased 5.4 percent to $315,000. Both figures are below records established earlier in the year.
Condos & Townhomes
Sales plummeted for the fifth consecutive month in October, dropping 19.4 percent year-over-year with 548 completed sales. The average price soared 9.3 percent to $269,936 while the median price jumped 3.9 percent to $226,500. Despite increases in prices, both figures are beneath records set in April of 2022. Inventory fell from a 2.3-months supply to 2.1 months as both buyers and sellers took a pause.
Broken out by pricing, here’s how October 2022’s real estate sales performed:
- $1 – $99,999: decreased 42.3 percent
- $100,000 – $149,999: decreased 34.8 percent
- $150,000 – $249,999: decreased 41.6 percent
- $250,000 – $499,999: decreased 18.7 percent
- $500,000 – $999,999: decreased 6.6 percent
- $1M and above: decreased 28.0 percent
Sales across all segments experienced declines as the market continued to shift. Decreases were particularly pronounced in lower-priced segments as prices continued to rise. This marked the seventh straight month of sales slowdowns. Compared to this time last year, mortgage interest rates are more than double – hovering around seven percent.
Total property sales and total dollar volume of sales also fell in October. Pending sales dropped 23.4 percent while active listings shot up a massive 43.0 percent.Days on Market grew from 32 days to 43 days year-over-year. In September, Days on Market rested at 37 days. Cooling demand may play a role in this increasing number, as may rising inventory levels creating more competition for sellers. October registered a 2.8-months supply of inventory, the highest supply since July 2020. However, Houston’s inventory levels still sit below national inventory levels, which stand at 3.2 months according to NAR®. A 6.0-months supply is typically considered a balanced market in which neither the buyer nor seller have the advantage. In other words, the market may be shifting, but it remains in sellers’ favor.
While these numbers might appear quite sobering, it’s important to remember that many of these values are being compared against 2021’s historic numbers. To put things in a pre-pandemic perspective, sales are 3.5 percent above where they were five years ago. The median price then was $226,500, and the average price was $284,659. Respectively, these values have soared 45.9 percent and 41.8 percent. Although sales in October 2022 were down 7.6 percent compared to October 2019, the median price then was 37.7 percent lower, and the average price was 35.4 percent lower.
According to HAR Chair Jennifer Wauhob, “The Houston housing market is heading towards more balanced conditions… We saw years of unprecedented growth, and it appears the market is finally nearing pre-pandemic levels. Higher mortgage rates are softening buyer demand. But as prices level off and inventory grows, we’re going to see more consumers move from the sidelines to the marketplace.”
What Does This Mean For You?
Buyers: The market showed mixed news for buyers in October. On one hand, rising inventory paired with decreased demand for homes has allowed buyers a better pick of what is available. On the other hand, a dearth of homes priced below $400,000 combined with high mortgage interest rates has made it challenging for some buyers to find “The One.” Buyers who can withstand the pressures of inflation and soaring interest rates may benefit the most from the current market. Once prices begin to level off, buyers can expect the market to become more competitive again. There is no clear indicator of when this will happen. Connect with a Realtor® now so you will be prepared.
Sellers: While this is still a sellers’ market, selling has become a bit more challenging. Increasing inventory levels means more competition, and buyers may be keen to offer lower prices due to the pressures of current economic conditions. However, prices are still continuing their upward trend, meaning that sellers can potentially reap big profits depending on their next move. A Realtor® can help you navigate pricing your home so that the sale is beneficial to you and fair to the buyer. Additionally, a real estate professional can advise you on what to expect in terms of sales time as market conditions cool.
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.