Houston’s housing market cooled in February as prices fell for the first time in nearly three years following an extraordinary surge in values spurred by the pandemic.
Buyers, struggling with the sharp rise in mortgage rates that began last year, a slowing economy and inflation, bought fewer homes in February as the market continued to transition to pre-pandemic conditions, according to the Houston Association of Realtors. It was the 11th consecutive month of year-on-year sales decline.
Single-family home sales fell 23 percent in February with 5,723 homes sold across the Houston area, down from 7,430 in February 2022, according to the Houston Association of Realtors’ monthly sales report. Compared to the same month in 2019, a year before the pandemic, sales were up 7.2 percent.
Sales trends
Ken EllisHAR board chair Cathy Treviño of real estate firm Side Inc. said the market is returning to normal as the shortage of available homes eases.
“The traditional year-over-year comparison shows a slowdown in the market, but even then there are positive trends in the form of moderate prices and increasing inventory that bode well for spring home buying,” Treviño said in the report.
The median home price — the price at which half of those sold were higher and half were lower — fell 1.6 percent over the year to $320,000 in February. The average sales price fell 2.4 percent to $385,103. It was the first year-on-year price drop since spring 2020, according to HAR.
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Prices, which are typically higher in the spring and summer when more potential buyers are shopping, have fallen from last year’s record median of $353,995 in June and record average of $438,294 in May. Still, today’s prices are more than 35 percent higher than they were in February 2019 when the median was $233,000 and the average was nearly $285,000, according to HAR.
What sells
Ken EllisMortgage rates have retreated toward 7 percent after falling back to nearly 6 percent this year, according to government-sponsored mortgage lender Freddie Mac.
Today’s higher rates can add $486 to the monthly payment on a median-priced home of $320,000 compared to the same size loan a year ago.
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Heading into the spring shopping season, buyers will have more choice than in recent years when bidding wars drove sales prices above the asking price.
The number of active single-family home listings reached nearly 20,000 in February, nearly double the roughly 10,500 in February 2022, according to HAR. but still below the 24,600 active listings in February 2019.
Months of inventory, which represents how long it will take to sell all current inventory at the current pace, more than doubled to 2.6 months in February. It is up from 1.2 months in February 2022. Four to six months’ inventory is considered a balanced market where buyer and seller are on equal footing.
The houses were on the market for an average of 63 days, a full three weeks longer than in February 2022, according to HAR.
