Houston’s real estate market is a mixed bag
Low mortgage rates, expanding economy drive jump in mid-priced home sales as low-end inventory lags
Home sales are finally seeing the pop real estate agents were hoping for when mortgage rates declined to three-year lows and Houston’s expanding economy rapidly added jobs.
Transactions in the midpriced home market made double-digit year-over-year gains last month, according to the Houston Association of Realtors, as sales of singlefamily homes in the $150,000 to $749,999 price range increased between 10.3 and 13 percent.
Lack of inventory had slowed the volume of home sales on the low end of the market for several months, according to HAR. Sales of homes priced between
$100,000 and $149,999 decreased 11.4 percent in October from the year before; there was only 2.2 months of inventory in the price range.
As for the high end, sales stagnated as homes sat on the market — a house worth more than $1 million took more than three months to sell, on average. Real estate agent Angelina Keck called luxury homes a buyer’s market. “They’re being picky, and they’re finding good deals,” she said of buyers.
Owen Murray, who manages investments on behalf of clients as a partner at Horizon Wealth Advisors, suggested Houston’s luxury market may be struggling because of volatile oil prices.
“Within our own client base, we deal with a lot of highly paid energy executives,” he said. “And there have been stunning consequences in response to turmoil in that business in terms of personal net worth and financial flexibility.”
Middle-market gains
Those issues were offset by gains in the middle of the market.
Prices in the mid range increased slightly even as sales volume surged. The median price for a single-family home in October was 2.1 percent higher than the year before, an increase in line with the rate of inflation. That’s compared to 6.5 percent year-over-year growth in October of 2016 (data for 2017 and 2018 were skewed by Hurricane Harvey).
That’s in part because there were more homes to choose from — the number of active listings in the market rose by 6.9 percent in October.
“People are more interested in selling,” said Jim Gaines, chief economist at the Texas A&M Real Estate Center.
But he noted that for homes in the $200,000 to $399,999 price range, inventory remained tight. At the rate they’ve been selling, it would take between three and four months to sell all of the homes in the price range.
Mortgage rates steady
Meanwhile, the average interest rate for a 30-year fixed-rate mortgage hovered around 3.6 percent in October, more than a full point lower than the year before — meaning homebuyers were able to afford to buy more expensive homes for the same monthly mortgage payments.
The low rates led to a surge in refinances over the summer, but they can take a longer time to influence home sales because of the length of time it takes to buy a home.
“Consumers continue to take advantage of attractive buying conditions, between low interest rates, a healthy supply of homes on the market and a strong overall Houston economy,” Shannon Cobb Evans, Houston Association of Realtors chair, said in a press release.
The number of pending sales shows the trend may continue. There were 20 percent more pending sales of single-family homes at the end of October than there were a year before.
“Interest rates are currently forecast to remain low into the new year,” Cobb Evans said, “so it’s possible that we get through the holidays without too much of a seasonal slowdown in home sales, but we’ll just have to see how things go.”
Sales figures also will likely receive an artificial bump in early 2020. The HAR only reports sales on homes listed on its Multiple Listing Service, and this week the National Association of Realtors passed a policy restricting Realtors from advertising homes outside of the MLS. According to the NAR, 11 percent of sellers do not list their homes on the MLS.