As summer temperatures soared to record highs in June, Houston’s sizzling housing market began a long-anticipated cooldown. Home sales experienced their first significant decline in 2022, reflecting a perfect storm that had been brewing for months: the combination of diminished inventory, record-high prices and, more recently, rising interest rates on top of a climate of growing inflation.
According to the Houston Association of REALTORS® (HAR) June 2022 Market Update, single-family home sales fell 8.6%, marking the third consecutive monthly year-over-year decline with 9,728 units sold compared to 10,649 in June of 2021. However, the market is still running 1.7% ahead of 2021’s record-setting volume.
Once again, the $500,000 to $1 million housing segment drew the highest sales volume of the month, registering a 22% year-over-year sales volume gain. Homes priced from $250,000 to $500,000 rose 2.4%, while the luxury segment (homes priced at $1 million and above) saw its first decline in two years, slipping 2.3%.
A continued lack of homes priced below $250,000 left consumers no choice but to weigh more expensive property options and shift their focus to rental homes or postpone buying or renting plans altogether.
Some relief came after the June home sales numbers were tallied. During the first week of July,
mortgage rates finally reversed course, with Freddie Mac reporting that the average interest rate on a 30-year fixed-rate loan fell from 5.7 to 5.3%, the biggest decline since 2008. However, 5.3% is well above the average rate of 2.67% on 30-year fixed-rate loans that prevailed in December 2020.
The average price of a single-family home rose 11% in June to $436,425, slightly below last month’s record high, while the median price jumped 13.2% to $355,000, which is the highest median of all time.
The average price for a single-family home in Houston broke the $400,000 mark in March this year. The median price has been above $300,000 since May of 2021.
“With strong economic headwinds facing consumers right now, it comes as no surprise that home sales fell in June and may stay below record levels for a while as the market normalizes,” said HAR Chair Jennifer Wauhob. “The decline in sales was inevitable given the limited supply of homes, record prices, rising interest rates and the pressures of inflation that we’re all feeling every day at the pump, in the supermarket and paying bills.”