Despite the fact that sales were down every month of the year, the Houston housing market performed respectably in 2023.

After defying sales expectations throughout the pandemic – when we quickly learned that people needed housing just as much as they did before the global crisis – the market seized upon 2023 as a time to normalize. Now, as we enter the final weeks of the year, we see vastly improved housing inventory and moderating prices. Both those elements had reached alarming extremes during the pandemic, with a limited selection of homes leaving many prospective homebuyers in the lurch, as the prices of those homes stretched beyond what many could afford.

The big challenge for real estate right now – not just in Houston but across the United States – is mortgage rates, which recently climbed to the highest levels in some 20 years. After kicking off 2023 at 6.48%, the average 30-year fixed-rate mortgage soared to a new 2023 high of 7.79% in the week ending Oct. 26, according to Freddie Mac. That is the highest rate since November 2000.

This upward trend has hindered home sales but also driven would-be buyers over to the lease market as they snap up rental homes which give them the look and feel of home ownership until (if) mortgage rates fall, and they can once again consider a home purchase. That is right about the time I tell reporters and clients who ask me what is going to happen that, unfortunately, I do not have a crystal ball and therefore have no idea what to expect where mortgage rates are concerned. That will be dictated by the actions of the Federal Reserve as it does what it deems necessary to keep inflation at bay.

One positive bit of news in HAR’s most recent housing report, for October, was that home sales across Greater Houston fell just 3.4% – the lowest monthly rate of decline for the year. Another was that months supply of homes climbed to 3.6, matching a level not seen since November 2019. Still another was the continued moderation of pricing, with the average price up just 0.4% to $403,556, while the median price dropped 0.9% to $327,000. Those figures are significantly below the record highs of $438,350 (average) in May 2022 and $354,000 (median) in June 2022.

Another bright spot in the Houston housing market in October was a 21.3% increase in sales among homes priced at $1 million and above, or what we consider the luxury market. That followed many months of declining sales in all pricing segments. Bright spots are always welcome. With that in mind, let me get back to the lease market, which has seen solid consumer interest all year long.

In October, rentals of single-family homes rose 4.3% year-over-year, with the average lease price edging up 2.2% to $2,231. New listings of single-family rentals climbed 9.8%, providing an ample supply of homes to meet the steady demand.

It’s worth noting that when HAR puts out its housing reports each month (most of which are published in Houston Agent Magazine), they cover the sprawling territory that compromises the Greater Houston market. They do not specifically address the neighborhoods that may be performing well or facing challenges. That is why we emphasize that real estate is local, meaning that despite the broad brushstrokes of our reports, each neighborhood has its own unique sales trends. That is precisely why we urge all consumers to use the services of a Realtor when buying, selling or renting a home, as they have the expertise in the market(s) that they serve.

Here’s wishing all of you a wonderful holiday season and hoping for an even more respectable year for Houston housing in 2024.

Cathy Treviño is the 2023 Houston Association of Realtors’ chair.