As expected, the Houston housing market continued to slow through September. This slowdown has been driven by rising interest rates, volatility in the stock market, and normalizing market dynamics post-pandemic. Although inventory levels are up, home prices continue to hold steady. The strength of the Houston economy continues to help our local market outperform most other big cities in the US. Higher-end markets have performed particularly well.
According to the latest report from the Houston Association of Realtors (HAR), 7,664 units were sold in September compared to 9,235 in September 2021. That’s a 5.1% decline from 2021’s record pace. 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 12.6 percent year-over-year sales volume gain.
Despite falling sales activity, home prices are still up year-over-year. The average price of a single-family home rose to $414,776 in September. That’s an 11.6 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 14.7 percent year-over-year to $343,950.
According to HAR, total active listings, or the total number of available properties, increased 36.3 percent to 35,694. September sales of all property types totaled 9,378, down 17 percent compared to September 2021. As a result, the absorption rate for September 2022 was 26 percent. Although still very strong by historic standards, this is down considerably from the crazy 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 37 days in September. That’s a little slower than the 29 days on market we saw last September, but still pretty quick by historic standards.
Inventory levels rose again in September, reaching a 2.7-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 over the past several weeks.
With mortgage rates on the rise and the volatility in the stock market, it is no surprise that we have seen a slowdown over the past couple of months. Despite this downturn, some neighborhoods are still performing well, especially neartown, Inner Loop markets. We anticipate this slowdown will continue through the holidays and we may see an improvement in buyer demand after the 1st of the year, especially among first-time home buyers.
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.