HAR: Tough Year of Sales Still One of Houston’s Best

by James McClister


It’s tough to improve upon a record-breaking year – a fact Houston discovered in 2015.

After a year of all-time best increases in prices and sales, Houston’s residential real estate market did not have many places to go in 2015. Add in the effect of falling crude value on the nation’s largest energy hub, and it was little surprise when sales and home prices started dipping.

All that being said, in 2015, Houston still achieved the second-highest sales level in its history, according to the Houston Association of Relators.

Falling Single-Family Sales

Single-family home sales slid nearly double digits (9.7 percent year-over-year) in December, which reflects a typical seasonal slowdown and the falling price of crude (West Texas Intermediate was priced at $29.65 a barrel as of this writing). Sales intermittently fell throughout 2015 as high prices and low inventory limited the number of new buyers entering the market, but it’s been the trend that the steepest declines are relegated to the lower and higher ends of the market. The distribution of sales declines in December were as follows:

•$1 – $79,999: sales decreased 25.6 percent
•$80,000 – $149,999: decreased 25.5 percent
•$150,000 – $249,999: unchanged
•$250,000 – $499,999: unchanged
•$500,000 – $1 million and above: decreased 17.2 percent

Despite falling sales and a growing inventory of 3.2 months, demand remained strong enough at the end of 2015 to push prices upward.

Year-over-year, the median price of a single-family home rose 2.9 percent to $216,000. While the increase fails to compare to the robust price jumps the city saw throughout 2014, the new median does still represent the highest all-time median price for a December in Houston.

Quick Look at the Condo Market

HAR noted that Houston’s condo market has developed along a track similar to single-family homes in the city, with sales falling and both median price and inventory growing slightly.

The drop in sales (down 2.9 percent year-over-year) was less pronounced in the condo market than in Houston’s preferred market (single family), and allowed inventory to jump from a 2.3-months supply to 2.9 months. Median price edged up 1.2 percent to just under $160,000.

Houston is More Diversified

In a statement accompanying HAR’s report, chairman Mario Arriaga of First Group relayed an expectant attitude.

“With oil dropping to levels around $30 a barrel, I think it’s fair to say that the Houston housing market is going to remain cooler for at least a little while,” he said.

In the 1980s, Houston dealt with a similar oil crisis, which hurt the city tremendously. But Arriaga is convinced that a more diversified Houston economy will keep the market afloat in 2015.

“The good new is the local economy is vastly more diversified than it was during the oil bust of the 80s, and other industries are continuing to hire, so it really is going to come down to consumer confidence,” he explained.

Over the next 12 months, it should become more apparent how Houston’s residential market will fair in the long term, but for the time being, job growth in the city is slowing greatly. The Texas Workforce Commission reported that Houston’s metro area added only 4,800 jobs in November, which is the third weakest November in 25 years. Typically, Houston tallies 10,000 to 12,000 new jobs in November, according to the Greater Houston Partnership.

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