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Demand Drives October Sales and Prices to Record Highs

by James McClister

Houston market continues defying national trends in October.

It was another month of a high sales activity for Houston, according to the latest sales report from the Houston Association of Realtors.

While other markets are settling in for the inevitable winter lull, Houston’s market is tumbling forward, full steam – though, inventory remains at crippling low levels.

In October, single-family home sales in Houston increased a whopping 12.3 percent year-over-year, bringing unit totals up to just over 6,600, while condo and townhome sales similarly rose 12.4 percent year-over-year.

Unfortunately, the increased sales activity has only worsened the city’s inventory, pushing what was already a low 2.9-months supply in September down to 2.8-months.

Inventory Remains Low While Prices Remain High

HAR’s findings paint the picture of a conflicted Houston market in a boom but suffering from inventory shortages and rapidly climbing, record-high home prices – though most remain affordable. The report showed:

  • In October, the average Houston single-family home came in at $262,013, a 9.8 increase in price year-over-year. The median price rose 8.3 percent to $192,000.
  • Totaling all property types, sales improved 12.9 percent since the same time last year, bringing in an overall dollar volume of $2 billion, a $300 million increase year-over-year.
  • In September, local employment grew 4.3 percent year-over-year.

Plenty of Homes for the Wealthy

Houston already leads the country in several housing categories, and recent growth is only going to further improve their long-term standing. However, in the short-term, there is some concern regarding rising home prices and what that means for lower income buyers.

HAR Chair Chaille Ralph of Heritage Texas Properties remarked that October’s 11.1 percent increase in new listings is helping to satisfy the growing demand, but largely, sales activity boosts are emanating from the higher-priced side of the market. New construction continues to focus on more pricey properties while inventory levels shrink, leaving low income and first-time homebuyers without a bevy of options, especially considering how busy the market has been this late in the year.

“Most Realtors are not accustomed to this brisk a pace of home sales in Houston this late in the year,” Chaille said. “This is typically when thoughts turn to the holidays and sales volume slows.”

In a recent interview with Realty News Report, National Association of Realtors Chief Economist Lawrence Yun speculated on the future of Houston’s market, predicting sale prices to continue climbing into 2015, further surpassing the nation’s progress. This could prove challenging for Realtors working in the lower end of the market, as property pools dry up. But, as we recently reported, dwindling oil prices and energy employment could help to revitalize the construction sector’s crippling labor shortage and compel developers to start building on remote areas with more affordable land.

If all goes accordingly, Houston could be moving towards a very bountiful 2015.

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