Latest drop in home sales shows continued turmoil
Real estate closings in the first week of June plummeted, setting back hopes that a boost in Houston’s home sales at the end of last month was a sign that pent-up demand might help soften the blow from the global pandemic and related oil bust.
Closings last week fell by 21 percent over the same week a year ago. Buyers closed on 1,977 homes during the week ending June 8, compared with 2,503 last year, according to new data from the Houston Association of Realtors.
The weekly figures were released
Wednesday with the association’s latest monthly report, which shows continued turmoil in the region’s real estate market during May.
Buyers closed on 6,671 single-family homes last month — down 20 percent year over year — at a median price of $249,000, off slightly from a year ago and from April of this year. May is normally one of the strongest months in the housing market.
Activity last month plummeted in all price categories. High-end properties — those selling for $750,000 or more — were off the most, plunging 56 percent from last year’s level. The higher end of the Houston housing
market generally rises and falls with the price of oil. Since the pandemic began and oil prices went into free-fall, energy companies have been slashing spending and are now laying off tens of thousands of employees.
Sales of moderately priced homes, which have long been in short supply, have been more resilient. The bulk of last month’s sales were for homes priced between $150,000 to $500,000.
“The business around $200,000, $250,000 is still pretty busy,” said Angelina Allen, an agent with Walzel Properties.
Allen recently listed a year-old home in the Adelaide subdivision in Katy for $215,000 and it went under contract in 10 days.
“We had multiple offers and they were all qualified,” she said.
For-sale inventory in May fell to 3.5 months, down from 4.1 months a year earlier, as more homeowners are pulling their listings off the market or waiting for a better time to sell.
Jennifer Hughes Hernandez, a senior loan officer with Legacy Mutual Mortgage, said homes priced below $300,000 are in high demand and sometimes become the subject of bidding wars.
“Values are not suffering in those price ranges, not that I’ve seen,” Hernandez said. “In fact, quite the opposite. I’m seeing agents price properties below market value, and people outbid each other.”
Year-to-date sales are nevertheless running 4.3 percent behind last year’s record pace, according to the association, which tracks sales handled through the Multiple Listing Service throughout primarily Harris, Fort Bend and Montgomery counties.
John Nugent, HAR’s chairman, cited a few positive developments: strong rental activity, an increase in sales contracts and historically low interest rates.
“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,” he said in the report. “We will eventually work our way through these challenges, and already see positive indicators.”