The Houston real estate market in November continued to slow as it entered the holidays. Part of that slowdown is the normal slowdown we see every year at this time. However, it was also a continuation of the slowdown in home sales we have seen for the past few months thanks to high inflation and elevated mortgage rates.
Thankfully, we have seen some decline in mortgage rates over the past few weeks, which might foretell some good news for 2023. You can learn more about why mortgage rates have been falling and our thoughts regarding 2023 in our recent 2023 Houston Real Estate Forecast.
According to the latest report from the Houston Association of Realtors (HAR), 5,827 units were sold in November compared to 8,374 in November 2021. On a year-to-date basis, the market now trails 2021’s record-setting volume by 8.8 percent. All market segments experienced some decline in home sales.
Despite falling sales activity, home prices are still up year-over-year. The average price of a single-family home rose to $403,589 in November. That’s a 5.8 percent increase compared to the same period last year. However, those prices are below the record high of $438,301 reached in May 2022. The median price jumped 7 percent year-over-year to $332,000.
According to HAR, total active listings, or the total number of available properties, increased 51.3 percent to 36,434. November sales of all property types totaled 7,171, down 30.2 percent compared to November 2021. As a result, the absorption rate for November 2022 was 20 percent. Although still very strong by historic standards, this is down considerably from the crazy absorption numbers we saw during the pandemic. At the end of the day, we have entered a much more normal balance than we have grown accustomed to over the past couple of years.
The Days on Market (DOM), or the number of days it took the average home to sell, rose to 48 days in November, up from the 43 days on market we saw last November.
Inventory levels rose again in November, reaching a 2.9-months supply. That is the highest level since July 2020. Housing inventory nationally stands at a 3.3-months supply, according to the latest report from the National Association of Realtors (NAR). A 6.0-month supply is generally considered a “balanced market,” in which neither the buyer nor the seller has the upper hand. By historic standards, we are still in a Seller’s market, but the market has definitely shifted in the buyer’s favor in recent months.
As we cover in our 2023 Houston Real Estate Outlook, we may see a little bit of a spike in demand after the 1st of the year. This will be dependent on mortgage rates and whether they continue to fall. The local Houston economy continues to perform well compared to other cities in the US. and many first time home buyers and existing homeowners are looking to make a move. As mortgage rates approach the 5s, we could see a lot of those prospective buyers enter the market. Although we don’t expect them to perform nearly as well as they did during the pandemic, Houston home prices will more than likely continue to increase in 2023, especially in near town neighborhoods.
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.