Houston has been home to one of the nation’s hottest housing markets for some time, but new HAR numbers suggest that may no longer be the case.
Throughout 2012 and 2013, it almost became cliche to report on the housing market of the greater Houston area, as each monthly report from the Houston Association of Realtors brought us a seemingly never-ending supply of positive news.
All parties have to end eventually, though, and HAR’s latest report on Houston’s housing market for the month of April is its most moderate in some time. Could Houston’s housing market finally be slowing down? Here are five reasons why that might be the case:
1. It’s Inventory, Stupid – Much like James Carville’s classic “It’s the economy, stupid” mantra, Houston’s dwindling inventory of homes is a ubiquitous talking point, and April did not bring much relief on that front. Inventory remained at a minuscule 2.6-months supply, which is down from the 3.4-months supply in April 2013 and far below the national average of 5.2 months.
2. The Streak is Broken – Up through March, home sales in Houston had increased by yearly measures an incredible 34 straight months, but that streak ended in April, with home sales flatlining (likely because of the low inventories).
3. Record Home Prices – One thing that the low inventory did do is push housing prices higher, with average sale price rising 7.0 percent and median sale price rising 5.4 percent to record highs for the Houston market. Though price increases are, on the surface, a good thing, new studies have suggested that prices in Houston may be rising too quickly, and that they may be pricing out some consumers in the process.
4. Pending Sales Stall – Even pending sales, which always pointed to stronger months ahead for Houston’s housing market, were down in April, falling 3.9 percent year-over-year. Given that it typically takes one to two months for pending contracts to close, we should anticipate more lukewarm sales data in the coming months.
5. Is the Trickle-Down in Housing Over? – One other very interesting detail to Houston’s real estate run was the prominence of higher-priced listings, and how much stronger their sales increases were than homes in the lower-priced tiers. In April, though, that pattern also slipped – though homes price $149,999 and less did see sales decline (as expected), homes priced $150,000 to $249,999, $250,000 to $499,999 and $500,000 to $1 million saw sales rise 7.0 percent, 7.7 percent and 6.0 percent, respectively; again, it’s alway good to see sales rise, but it’s not quite at the levels we became accustomed to in previous months.