Although still relatively low, mortgage rates have been on the rise over the past several weeks. Throughout January rates continued to creep near 4% and finally broke through over the first couple of weeks of February. Inflation, and the Federal Reserve Boards’ response to inflation, have been the main causes for this near-term spike. Thankfully, mortgage rates are still relatively low in historic terms.
Despite the rising mortgage rate environment, homebuyers continued to gobble up available properties, which helped continue the robust activity level we saw throughout 2021. According to the latest report from the Houston Association of Realtors (HAR), 6,451 single-family homes sold in January compared to 6,024 last January for a 7.1 percent increase. Homes priced over $1MM registered the greatest gains with a 52.2 percent year-over-year increase. The $500,000 to $1 million housing segment came in second place, surging 47.1 percent.
Huge activity in homes priced below $250,000 continued to push prices higher. The average price for single-family homes increased 16.2 percent to $377,738. The median home price increased 17.9 percent to $310,000. Although both of these numbers are highs for January, prices are slightly down from the highs reached in 2021.
Homebuyers continue to goggle up the available stock of homes at a pretty good clip. According to HAR, total active listings, or the total number of available properties, fell 14.2 percent to 21,643. January sales of all property types totaled 8,143, up 9.3% compared to the same month last year. As a result, the absorption rate for January 2022 was 38 percent. That’s a 10 year high for January.
Days on Market (DOM), or the actual time it took to sell a home, has been gradually increasing over the past few months. In January, the average home sold in 39 days, which is still lower than 48 days on market we saw last January. Single-family home inventory remained flat from December to January with 1.4 months of available supply. For perspective, housing inventory across the U.S. currently stands at a 1.8-months supply, according to the latest National Association of Realtors (NAR) report. Inventory is still extraordinarily low.
All in all, it was a good start to the year for the Houston Real Estate market. Obviously, we would prefer mortgage rates to remain low, but also have some perspective about where rates are relative to historic levels. We anticipate homebuyers will agree and continue to take advantage of those low rates as we approach the busy Spring.