The Houston real estate market posted a surprisingly strong start to the year, according to the latest Market Update from the Houston Association of REALTORS® (HAR).

Single-family home sales rose 9% year over year in January, the second annual increase in two years. The Houston MLS recorded 5,009 home sales, up from 4,595 in January 2023. Pending sales also increased by 6.3%.

The highest-performing housing segment was that of homes priced $500,000 to $1 million, which increased by 16.7% annually, followed by the segment priced $1 million and up, which rose 15.4%. Homes priced between $250,000 and $500,000 rose 13%, while sales for those priced $100,000 to $250,000 were flat.

The median price of a single-family home rose 2.1% to $320,500 in January, while the average rose 2.7% to $391,080 — that’s the first time the average price has been below $400,000 since February 2023. Meanwhile, the monthly supply rose from 2.6 months to 3.3 months as active listings jumped 17.8% year over year.

“January was an unexpectedly positive month for Houston housing, but we don’t want to get ahead of ourselves because we know that consumers are still keeping a wary eye out for interest rates and inflation,” HAR Chair Thomas Mouton said in the report. “Rental housing is proving to be a viable option for hesitant buyers as it also had strong activity in January.”