‘Unreal demand’ fuels home sales

Purchases of single-family units rose 27.7 percent in tight Houston market

Sales of single-family homes jumped 27.7 percent year over year and prices spiked in January as buyers competed for homes in an increasingly tight Houston market.

Buyers closed on 6,088 single-family homes in January, up from 4,769 in January 2020 and the eighthstraight month of yearover-year increases, according to a monthly report from the Houston Association of Realtors. Low interest rates, short supply and a surge in sales at the high end of the market helped push the the median price of a Houston-area singlefamily home up 12.1 percent to $263,500, also a record for January.

“Remember this time last year when everybody was looking for toilet paper? That’s what the real estate market is like right now,” Chance Brown, broker/owner with CB&A Realtors

said in reference to COVID-driven shortage.

Year-over-year sales have been up more than 25 percent each of the last five months, depleting the inventory to a record low 1.8 months supply. The months inventory, which measures how long it would take to sell every home on the market based on recent activity, is down from 3.3 months in January 2020. Six months inventory is considered a balanced market.

Brown, who has been selling real estate for 20 years, said this “unreal demand” is driven by a confluence of historically low interest rates, homeowners staying put after refinancing and people moving to Texas and within Houston to the suburbs because the commute is no longer a concern.

“I think COVID made people want to have a place of their own,” Brown said.

Properties are receiving multiple offers, often sight unseen, across all price ranges, he said.

“The Houston real estate market carried the momentum of 2020 into the new year, however we believe that the current pace

of sales is unsustainable without an infusion of new listings into the marketplace,” HAR Chairman Richard Miranda said in the report. “It’s our hope that as we move out of the winter months, more sellers will begin to put their homes on the market and help boost inventory to pre-pandemic levels.”

Active single-family home listings fell to 14,783 in January from 24,005 the year earlier, according to HAR.

The volume of sales for homes priced from $500,000 to $749,999 increased 70 percent, while volume for those priced above $750,000 increased 74 percent.

Sales of homes priced below $150,000, which make up 7.3 percent of sales, dropped.

Home priced from $250,000 to $499,000 had a 37 percent jump in sales in January, while sales of homes from $250,000 to $499,999 rose by 45 percent, according to HAR.

While January’s median price came close to the record of $273,443 set the prior month, the month’s sales were still well below the July 2020 record of 10,815.

Brown, of CB&A Realtors, said buyers are doing what they can to make their offer stand out.

That means more cash offers, which provide the seller with more certainty a deal will close; not asking for a home warranty; and higher option period payments. A buyer might pay $500 rather than the standard $100 for the 10 day period while inspections are done and can forfeit those funds if the contract is terminated.