Coronavirus, energy industry continue impact on Houston real estate in May
Houston home sales fell for a second straight month in May as the impact of COVID-19 and related stay-at-home orders continued to play out throughout the market.
Growing consumer interest for in-person open houses and property showings, as well as an increase in offers to purchase, demonstrated improving market conditions.
The slumping energy industry limited buyers in the luxury home market, which affected the overall average price of single-family homes across the region.
Predicting the future of the market remains a challenge, and just this week, the National Bureau of Economic Research declared that the United States has been in a deep recession since February.
Homes in every pricing category suffered losses, with the steepest declines at the low and high ends of the market. Homes priced below $100,000 dropped more than 37 percent while those priced above $750,000 plunged more than 56 percent. Year-to-date sales are now running 4.3 percent behind 2019’s record pace. Leases of single-family homes were the bright spot in May, jumping nearly 12 percent.
According to the latest monthly Market Update from the Houston Association of Realtors (HAR), 6,671 single-family homes sold in May compared to 8,359 a year earlier. That translated to a 20.2 percent decline — the second consecutive monthly decline since the pandemic struck the market.
The lower sales volume, particularly among high-end homes, took a toll on average sales price numbers, however strong demand in the mid-priced market kept the median price of homes statistically flat. The single-family home average price dropped 7.4 percent to $298,199, while the median price dipped just 0.4 percent to $249,000. The last time home prices saw declines was in January 2018.
Sales of all property types totaled 7,917, down 20.7 percent from May 2019. Total dollar volume for the month fell 25.9 percent to slightly more than $2.2 billion.
“May delivered another mixed bag of data for the Houston housing market given the ongoing coronavirus pandemic on top of strains in the oil patch and the broader recession,” said HAR Chairman John Nugent with RE/MAX Space Center. “We will eventually work our way through these challenges, and already see positive indicators in the form of strong rental activity, solid pending sales numbers and steady attendance at property showings across greater Houston. Historically low interest rates still make conditions appealing to would-be buyers.”
• Lease property update: Consumers snapped up rental homes in strong numbers in May. Leases of singlefamily homes surged 11.9 percent year-over-year. However, leases of townhomes and condominiums slid 4.6 percent. The average rent for single-family homes was down 2.8 percent to $1,822 while the average rent for townhomes and condominiums was fell 4.6 percent to $1,586.
• May monthly market comparison: The lingering coronavirus pandemic layered on top of strains in the energy sector weighed heavily on the Houston real estate market for a second consecutive month in May. Singlefamily home sales, total property sales, pricing and total dollar volume all fell compared to May 2019. Pending sales, however, jumped 23.1 percent. Total active listings, or the total number of available properties, was down 8.3 percent.
With a slowdown in new listings to the marketplace, single-family homes inventory shrank, registering a 3.5month supply in May versus 4.1 months a year earlier. For perspective, housing inventory across the U.S. stands at a 4.1-month supply, according to the most recent report from the National Association of Realtors (NAR).
• Townhouse/condominium update: Townhome and condominium sales, which took a hit in April along with the single-family segment, experienced another dramatic fall in May, plunging 36.0 percent. A total of 417 units sold compared to 652 one year earlier.
The average price tumbled 2.3 percent to $206,146 while the median price rose 2.9 percent to $175,000. Inventory grew slightly from a 4.5-month supply to 4.6 months.