Although mortgage rates have dropped in recent days. rising rates have caused a slowdown in home sales activity across the Houston market. Despite this slowdown, home prices remain higher year over year. As the market normalizes to pre-pandemic levels, we should see much more balance between buyer and seller. Home prices should continue to hold above 2021 prices and there should be more options for home buyers.
According to the latest report from the Houston Association of Realtors (HAR), 6,641 units were sold in October compared to 8,597 in October 2021. On a year-to-date basis, the market now trails 2021’s record-setting volume by 6.7 percent. All market segments experienced some decline in home sales. The smallest decline in sales was for homes priced between $500,000 and $999,999, which fell 6.6 percent.
Despite falling sales activity, home prices are still up year-over-year. The average price of a single-family home rose to $403,712 in October. That’s a 7.2 percent increase compared to the same period last year. However, those prices are below the record high of $438,384 reached in May 2022. The median price jumped 8.4 percent year-over-year to $330,500.
According to HAR, total active listings, or the total number of available properties, increased 43 percent to 36,751. October sales of all property types totaled 8,223, down 22.7 percent compared to October 2021. As a result, the absorption rate for October 2022 was 22 percent. Although still very strong by historic standards, this is down considerably from the crazy absorption numbers we saw during the pandemic.
The Days on Market (DOM), or the number of days it took the average home to sell, rose to 43 days in October, up from the 32 days on market we saw last October.
Inventory levels rose again in October, reaching a 2.8-months supply. That is the highest level since July 2020. Housing inventory nationally stands at a 3.2-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 enter the holidays, it is expected that the market will continue to slow. Thanks to some good inflation new mortgage rates have fallen near 2-month lows in recent days. Future inflation news will dictate whether rates continue to fall. If they do, we may see a quick spike as some pent-up demand enters to market. The local Houston economy continues to perform well compared to other cities in the US. Many prospective homebuyers are ready to buy but are looking to time their purchase based on changing rates. Prospective buyers and sellers should plan ahead so they can take advantage of the timing that works best for them.
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.