Despite the Houston market’s robust performance last month, sales volume in April failed to keep up with the previous year’s historic pace as record-high prices, rising interest rates and limited inventory weighed on home-buyers during what is traditionally the busiest season for real estate.
Single-family home sales were statistically flat in April, registering a fractional 0.2% year-over-year decline, according to a new report by the Houston Association of REALTORS®. A total of 9,079 homes were sold last month compared to 9,100 in 2021.
However, the market has maintained strong momentum on a year-to-date basis, running 7.4% ahead of last year’s record-setting volume. Low inventory and high prices have forced would-be buyers to rent instead, driving single-family home leases up 17.2%. In contrast, townhome and condominium leases fell by 3%.
The sales volume of homes priced between $500,000 and $1 million saw the most significant increase in April, rising 45% year over year. Houston’s luxury market (homes priced above $1 million) experienced the second-highest volume gain, shooting up 24.9%, while the $250,000 to $500,000 housing segment came in third place with a 13.5% gain.
A continued lack of available homes priced below $250,000 has left consumers no choice but to lease or shop for more expensive homes amid rising interest rates, the report noted. Mortgage rates are surging at the fastest pace in 40 years, driven mainly by the Federal Reserve’s aggressive efforts to curb inflation.
Pricing for a single-family home in Houston surpassed $400,000 for the first time in March. The record-high home prices seen in March were topped in April, as the average cost of a single-family home rose 14.9% to $426,061, and the median price jumped 16.6% to $343,990.
“Contrary to what some people think, we do actually have new listings hitting the market, but they are selling exceptionally quickly and at some of the highest prices of all time as buyers and investors make cash offers well above asking price to beat back their competition,” said HAR Chair Jennifer Wauhob. “Consumers have grown increasingly wary of the buying frenzy, and many are considering postponing their purchasing plans because pricing and interest rates have exceeded their reach. Unfortunately, we don’t anticipate conditions to improve anytime soon.”
According to the report, the sale-to-list-price ratio for single-family homes reached 100.6% in April, the highest percentage ever seen in Houston. The ratio first broke the 100% mark last June and again in July, as high-dollar buying permeated the market.