Houston home-buyers defy rising interest rates, limited inventory to boost March sales

by Lindsey Wells

The local real estate market in March remained in positive territory as consumers proved undaunted by rising mortgage interest rates and the record-low supply of homes across Greater Houston.

While new listings are entering the market weekly, buyer demand has consistently outpaced that supply. As a result, multiple home offers continue to push pricing into record territory, solidly positioning Houston as a sellers’ market, the Houston Association of REALTORS® (HAR) reports.

According to the HAR March 2022 Market Update, single-family home sales increased 4.1%, with 9,693 units sold compared to 9,309 in March 2021. The rental market is also strong, as consumers unable to purchase a home are instead opting to lease. 

Homes priced between $500,000 and $1 million led the way in sales for the month, registering a 36.1% year-over-year gain. The $250,000 to $500,000 segment came in second place, climbing 24%, followed by the luxury market (homes priced above $1 million), which increased 16%.

A continued shortage of available homes below $250,000 has left consumers no choice but to shop for higher-priced homes or lease. It remains to be seen if mortgage rates, which topped 5% last week for the first time in years, will slow the pace of home-buying in April, the report noted.

After reaching record prices in February, buyers pushed pricing even higher in March. The average price of a single-family home rose 11.4% to $410,923, while the median price jumped 15.5% to $335,000. This marks the first time pricing for a single-family home in Houston has surpassed $400,000.

“We are experiencing unprecedented market conditions in Houston with a frenetic pace of home-buying despite limited inventory, rising prices and steadily climbing interest rates,” said HAR Chair Jennifer Wauhob in a press release. “This is taking place amid a backdrop of continued supply chain problems and rising prices for everything from gasoline to groceries, which only adds to consumer pressures. We expect to see buyers start to pull back a bit until conditions stabilize if they indeed do.”

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