The Houston real estate market had a robust performance in April, however, for the first time in 2022, sales volume failed to beat last year’s historic pace as record high prices, rising interest rates and limited inventory weighed on homebuyers during what is traditionally the busy spring homebuying season.
Single-family home sales were statistically flat, registering a fractional 0.2 percent decline with 9,079 units sold compared to 9,100 in April of 2021. On a year-to-date basis, however, the market has kept the momentum of what has so far been a strong year – running 7.4 percent ahead of 2021’s record-setting volume. Would-be homebuyers who have instead opted to rent drove single-family home leases up 17.2 percent, but pulled back a bit from townhome and condominium leases, which fell 3.0 percent.
Homes priced between $500,000 and $1 million experienced the largest increase in sales in April, registering a 45.0 percent year-over-year sales volume gain. That was followed by the luxury market – consisting of homes priced at $1 million and above – which shot up 24.9 percent. The $250,000 to $500,000 housing segment came in third place, climbing 13.5 percent.
A continued lack of available homes priced below $250,000 has left consumers no choice but to shop for more expensive homes amid rising interest rates or to lease. Mortgage rates are surging at the fastest pace in 40 years, driven largely by the Federal Reserve’s more aggressive efforts to curb inflation.
After reaching record prices in March, buyers pushed Houston home prices to even higher levels in April. The average price of a single-family home rose 14.9 percent to $426,061 while the median price jumped 16.6 percent to $343,990. Pricing for a single-family home in Houston surpassed $400,000 for the first time in March of this year.
“Contrary to what some people think, we do actually have new listings hitting the market, but they are selling exceptionally quickly and at some of the highest prices of all time as buyers and investors make cash offers well above asking price to beat back their competition,” said HAR Chair Jennifer Wauhob with Better Homes and Gardens Real Estate Gary Greene. “Consumers have grown increasingly weary of the buying frenzy and many are considering postponing their purchasing plans because pricing and interest rates have exceeded their reach. Unfortunately, we don’t anticipate conditions to improve anytime soon.”
The ‘Close to Original List Price Ratio’ for single-family homes reached 100.6 percent in April — the highest percentage ever. That means that a majority of buyers paid above list price for homes on the market. The ratio first broke the 100 percent mark last June, and did so again last July, as high-dollar buying began to permeate the market.
Lease Property Update
Houston’s lease market registered a mixed performance in April. Single-family rental homes benefited strongly from consumers that postponed homebuying plans, rising 17.2 percent year-over-year. Leases of townhomes and condominiums, however, fell 3.0 percent. The average single-family rent rose 10.2 percent to $2,164 while the average rent for townhomes and condominiums increased 8.4 percent to $1,831.
April Monthly Market Comparison
Record high home prices, rising mortgage interest rates and dwindling inventory caused the Houston real estate market to slow its roll in April, with many consumers putting off purchases and sitting tight or opting to rent instead. Single-family home sales were statistically unchanged year-over-year, however on a year-to-date basis, they are 7.4 percent ahead of last year’s record pace.
With the exception of single-family home sales and pending sales, the monthly market metrics showed positive readings. Active listings (the total number of available properties) rose 5.2 percent. Sales of all property types were statistically unchanged, totaling 11,384, and total dollar volume for April jumped 14.5 percent to $4.5 billion.
Months of inventory edged up to a 1.4-months supply, which is just slightly above the lowest level of all time. Over the past year, its highest level was a 1.7-months supply from July through October of 2021. Housing inventory nationally stands at a 2.0-months supply, according to the latest report from the National Association of Realtors (NAR). A 6.0-months supply is traditionally considered a “balanced market,” in which neither the buyer nor the seller has the upper hand.
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