For sale at top dollar: Median home price $300K
High demand lays foundation for historic hikes in cost, sales records
Houston’s housing market shattered records in May as buyers paid top dollar to win bids on a limited number of properties up for sale.
The median price of a home in the market broke through the $300,000 threshold as inventory held at historic lows and transactions at the high end drove sales in May, according to the Houston Association of Realtors monthly housing report. More than a third of home sales last month were for more than the list price.
The median price of singlefamily homes jumped 21.7 percent over the year to $304,000 in May, according to the association. The average sales price also soared to a new high, rising 29.7 percent over the year to $387,105. The market is being driven higher by increased construction costs, strong demand propelled by low interest rates and an influx of buyers from out of state seeking a lower cost of living.
“We are witnessing the most energized Houston real estate market in history,” Richard Miranda, chairman of the local Realtors’ association, said in the report. “Sellers maintain the upper hand, and buyers are not just meeting their de
mands. They are exceeding them, as we hear endless accounts of offers coming in that are thousands of dollars above list price. It’s difficult to predict how and when this incredible housing run will end.”
Sales rocketed 48.2 percent year over year as 9,702 single-family homes changed hands in May. The sales are up from 6,546 in May 2020 when the market was recovering from coronavirus related lockdown orders. May marked the 12th straight month of increases and the largest ever year-over-year sales gain.
New home demand
More than 1,700 sales, or about 18 percent of the May deals tracked by the Realtors’ association, were new homes. Demand is so strong, builders are restricting the number of homes they’re selling in communities across the Houston region.
“If they sell at the pace the buyers are coming in, they won’t be able to keep up,” said Kunal Seth, with the Seth Brothers Team and regional vice president of growth for eXp Realty.
Buyers could also be on a waiting list with hundreds of others, as in the case in Grand Trails, a community by Meritage Homes near the Grand Parkway and the Westpark Tollroad with houses starting in the high $200,000s. The community will have 129 homes, and Seth said the builder told him it has more than 500 people on the interest list.
“They’re churning out homes that buyers are lining up to buy,” Seth said.
Preeti Sidhu bought a house for her mother, who is moving to the area from Canada, just before a price increase at Grand Trails.
She paid $305,000 for a 1,500-square-foot house, or about $200 a square foot. Sidhu views the price as high for Richmond but still sees it as a good investment.
“Houston is a market where people keep coming,” Sidhu said. “I don’t see these prices going down.”
At the same time, a majority of builders in the Houston area report having to curtail home building because of rising materials costs, supply issues and a limited number of buildable lots, according to Zonda, a housing information firm. The situation is not unique to Houston, but it’s surprising to see it here.
“Houston can usually produce new houses, subdivisions, lots much more efficiently and easier that other parts of the county,” said Lawrence Dean, Houston regional director for Zonda.
Some builders with waiting lists are moving to a bidding process, similar to how existing homes are sold, where buyers put in an offer with their best price, he said.
Shrinking inventory
It’s not just new homes that are hard to find. The number of active listings shrank by 48 percent over
the year to 12,275, according to HAR.
“As soon as a new listing comes on the market, within 24 hours we have at least 10 showings,” Seth said. “Within 48 to 72 hours, we have multiple offers.”
The stiff competition led 3,607 buyers — representing 37 percent of the sales — to pay more than the list price for their home in May, according to the Houston Association of Realtors. That compares with 9 percent of sales going over asking price in May 2020.
Sales of luxury homes, those priced at more than $750,000, rose 291 percent from May 2020 levels, according to the association. Sales volume for homes priced from $250,000 to $499,000 — the category that made up just over half of the sales — rose by 83 percent. Sales of homes priced from $500,000 to $749,999 went up by 166 percent.
Even as prices rose, deals were happening quickly. Homes spent an average of just 34 days on the market in May, down from 58 days in May 2020.
The inventory of homes held at 1.4 months for the
third straight month, down from 3.3 months in May 2020. It was tightest for homes from $150,000 to $249,999 at 0.7 months. A six-month supply is considered a balanced market.
Not every price category registered sales gains, but that was simply because there was not much listed for sale. Sales volumes fell for homes priced below $250,000, according to the Realtors’ group.
Seth said homes are available for less than $250,000, but buyers will have to go farther out and will get less for their money than a year ago.
“What’s good about Houston is a buyer can name their price, and there’s a home for them,” Seth said. “But what they will get for the money will not be as big or have as many rooms.”