Housing market still cooling off
Falling oil prices, higher mortgage rates, low home inventory prompt slowdown in sales
Houston-area home sales fell for the third-straight month in January as buyers closed on 362 fewer homes than they did at the same time last year, further proof that the once-hot local housing market is returning to a more moderate pace.
Sales volumes fell in all segments of the market, from entrylevel to luxury, which saw its first decline in 12 months, according to a monthly report from the Houston Association of Realtors. The median price of a single-family home in January was $222,000, up 1.4 percent from last year in the smallest yearover-year increase since October.
“We’ve been on a really good run for 10 years,” said Darel Daik, chief executive of Noble Mortgage & Investments. “I think it’s natural point for Houston to slow down.”
Houston saw 4,100 single-family home sales in January, an 8.1 percent drop from the total a year ago, according to the Realtors Association, which tracks sales handled through the Multiple Listing Service, primarily in Harris, Fort Bend and Montgomery counties. Sales of townhomes and condominiums fell 10.5 percent, declining for the fifth consecutive month.
The market has been facing headwinds in recent months as
higher mortgage rates, falling oil prices, low inventory and rising home prices have taken a toll on what had been a record year for the local housing market, one in which sales volume and price records were shattered.
‘Buyer’s market’
Daik, whose company makes loans to real estate investors, said he’s noticed a slowdown professionally and personally. He recently signed a contract for a home in Rice Military and said that since he began looking a few months ago — he had been living in an apartment after a divorce — he noticed builders cutting their asking prices in the inner-loop neighborhood near Memorial Park.
Daik has agreed to pay $475,000 for a new two-story townhome with three bedrooms, three-and-a-half bathrooms and a small yard and covered patio. The list price was $499,000. “It seems like a buyer’s market now,” he said.
Economist Bill Gilmer, director of the University of Houston’s Bauer Institute for Regional Forecasting, said he’s not surprised by the softness, based on higher interest rates and lower oil prices.
“There is nothing dramatic here,” he said. “Nothing that should not have been seen coming.”
While the pace of sales has slowed, the rental market has seen a bump. Rental activity rose sharply in both the single-family home and townhome and condominium markets, spiking 16.5 and 16.4 percent, respectively — volumes not seen since November 2017.
Rebecca Katic was among those driving the activity, recently renting a three-story townhouse in Montrose after selling her longtime home in Braes Heights after a divorce.
“I was looking for three bedrooms centrally located within my budget. It was really stressful,” she said. “There was not a lot that I looked at that I could afford.”
The place she settled on was at the very top of what she wanted to pay: $3,500 per month.
Options abound
On the for-sale side, buyers have more options than they did last year at this time. The number of properties for sale last month was up 16.8 percent to 38,872.
Single-family home inventory recorded a 3.7-months supply in January, up from a 3.2-months supply a year earlier and a 3.5month supply in December.
“January appears to have delivered a perfect economic storm of sorts, with some consumers focused on paying off holiday credit card bills, others concerned about the recent bump in mortgage rates and still others that may have felt the squeeze from the partial government shutdown,” Shannon Cobb Evans, the association’s chair, said in a statement. “We are encouraged by the strong performance among rental properties, and I believe that as inventory levels continue to grow, more buyers will return to the market.”
Month-end pending sales of single-family homes totaled 6,528, a 12 percent increase over last year. That’s a higher figure than the previous three months and could signal a stronger February when the numbers are tallied.