Houston home prices hit new highs as inventories remain at record highs


Home prices hit new highs in April, driven by sales volume in the upper end of the market, which was more than double the activity seen a year ago, when the market began to emerge from the lockdown induced by the pandemic.

The median price of a single-family home hit a record high $ 295,000, up 17.6% from April 2020, according to the Houston Association of Realtors Monthly Housing Report. The number of sales climbed to 9,105, a 47.4% increase from 6,175 sales in April 2020, as sales activity only rebooted as real estate agents embraced virtual exhibits and removed sanitizer for hands.

Record home prices and surging sales in April show the turnaround the market experienced a year after the start of the pandemic.

A year ago, when Houston set itself up to prevent the spread of the novel coronavirus and industries hard hit by social distancing, unemployment skyrocketed, many worried about the housing market. Lenders have increased their credit requirements for fear that borrowers will soon lose their jobs; many have stopped taking out large mortgages altogether. The Mortgage Bankers Association reported that mortgage applications fell 19% in the first week of April 2020.

But government actions over the following year, coupled with the uneven financial impact of the pandemic, pushed home sales to new heights. Congress took action to prevent foreclosures from flooding the market and the Federal Reserve helped push mortgage rates to unexplored levels, while many white-collar workers found their wages unchanged, but their jobs requiring much more time at home.

Strong demand for housing, driven by the desire for better space as people spend more time at home during the pandemic, coupled with low interest rates are driving multiple offers and sales above the market. asking price. On average, homes sold for 99% of the list price, up from 95.8% in April 2020, according to the Houston association.

“In my 20 years in real estate, I have never seen such dramatic forces sweeping the Houston housing market as we have experienced since the onset of the coronavirus pandemic,” said the President of Houston Association of Realtors Richard Miranda with Keller Williams Platinum, in a statement. . “The market is moving at a record pace, fueled by low mortgage rates despite dwindling inventories and rising prices.”

Homes priced $ 750,000 and above saw the biggest increase in sales volume, up 164% from April 2020, according to the local real estate association. Sales volume in the $ 500,000 to $ 749,999 range increased 132%. These two highest price categories accounted for 15.8% of April sales volume.

Sales of homes in the most popular price segment – from $ 250,000 to $ 499,000 – increased 80.6%. Only homes priced under $ 150,000 saw their volume decline, largely due to a lack of inventory on the market.

Low interest rates turn tenants into buyers and spur progressive buyers and those downsizing to take action, said Karen Sumner, an agent with Coldwell Banker Realty who sells homes throughout the Houston area.

Sumner expects to see “insane numbers of offers” on homes priced under $ 300,000. But even homes starting at $ 600,000 and up sometimes get up to 10 bids.

“Almost every listing has had multiple offers so far this year; none sold below list price, ”Sumner said. “It also affects inspection requests, because with fallback offers in place on highly desirable properties, sellers are not giving too many concessions because other buyers are willing to buy as is.”

Inventory held at an all-time high of 1.4 months, unchanged from March and two full months less than in April 2020, according to HAR. Inventory represents the time it would take to sell everything in the market at the current rate of sales. Six months is considered a balanced market where buyers and sellers are on an equal footing.

New listings, which rose 26.8% year-over-year, did little to alleviate the shortage as buyers bought homes. The number of active registrations fell to 12,251 in April from 25,028 the previous year. Homes move quickly and sell for an average of 40 days in April, up from 58 days a year ago.

Average home prices also set a new record, increasing 20% ​​year-over-year to $ 371,854 in April, according to the Houston Association of Realtors.

Pending sales, which indicate future closings, jumped 72.4% to 11,140 homes, according to the local association.

Rents for single-family homes increased 11% year-over-year to $ 1,960, while average townhouse / condo rents rose 8% to $ 1,688.

About 80 percent of April home sales were of existing homes, according to the Realtors Group. Existing homes sold for an average of $ 372,884, up 24.5% from the previous year.

In the Metro Houston area, home builders are building quickly to meet demand. First-quarter housing starts in the region totaled 9,917 homes, up from 8,403 in the first quarter of 2020 and the highest since 2007, according to Zonda, a housing research and advisory firm.

The supply of finished new homes is also at an all-time low, with 1.3 months of inventory, according to Zonda. As with existing homes, inventory is tightest for homes priced under $ 300,000.

“I don’t see any drop in demand for housing,” said Patrick Jankowski, senior vice president of research at the Greater Houston Partnership. “It’s going to continue to stay tight until we have more lots developed and a few houses on the land.”

RA Schuetz contributed to this report.

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