As expected, the Houston housing market continued to slow through July. As a result, inventory levels are up and home prices have begun to level off. Considering the frenetic pace of the market we have seen for much of the past couple of years, this slowdown is a little sharper than what we have seen the past couple of years. The absorption rate has fallen below 32 percent for the first time since January 2021 and inventory levels have risen to the highest level since August of 2020. This sharper decline has been driven primarily by higher mortgage rates. However, we have seen a recent pulling back from the peak rates we saw in June and July.
According to the latest report from the Houston Association of Realtors (HAR), 8,370 single-family homes sold in July compared to 10,102 a year earlier for a 17.1 percent decline. That decline in sales activity did not extend to all markets. The $500,000 to $1 million housing segment drew the highest sales numbers of the month, registering a 10.1 percent year-over-year sales volume gain.
Despite falling sales numbers, home prices are still up year-over-year. The average price of a single-family home rose to $426,494 in July. That’s an 9.9 percent increase compared to the same period last year. However, those prices are below the record high of $438,844 reached in May 2022. The median price jumped 12.7 percent year-over-year to $348,740. That is also off the historic highs we saw last month.
According to HAR, total active listings, or the total number of available properties, increased 30 percent to 33,711. July sales of all property types totaled 10,180, down 17.4 percent compared to July of last year. As a result, the absorption rate for July 2022 was 30 percent. Although still very strong by historic standards, this is down considerably from the numbers we have seen over the past couple of years.
Homes continue to sell pretty quickly. Despite the slowdown last month, the Days on Market (DOM), or the number of days it took the average home to sell, fell to 26 days in July.
Inventory levels rose again in July, reaching a 2.5-months supply. That is the highest level since August of 2020. Housing inventory nationally stands at a 3.0-months supply, according to the latest report from the National Association of Realtors (NAR). A 6.0-months supply is generally considered a “balanced market,” in which neither the buyer nor the seller has the upper hand.
All in all, this is the most balanced market Houston has seen in months. Although inventory levels are up, prices are still maintaining much of the gains we saw in the Spring and homes are still selling relatively quickly. From a buyer’s perspective, there are more options available and probably a little more negotiating room, as we are seeing far fewer multi-offer bidding wars. As we approach the fall, we will probably see a continued rise in inventory levels, but we think prices will probably still continue to hold into next year.
Whether the market is booming or slow, be prepared. Make sure you have the information you need to make an informed decision on when to start house hunting or listing your home. Contacting a Norhill Realtor is a good place to start. Get connected with one of our experienced agents who can talk you through the market in the neighborhoods you care about as well as discuss the timing for either selling or buying.