Despite persistently high mortgage interest rates, indicators so far this year are positive for the Houston real estate market — just in time for the spring homebuying season.
To be clear, the market has actually been in healthy shape for a while if you include rental properties in a broader view of local housing trends. Even as mortgage rates reached 20-year highs in late 2023, would-be buyers did not abandon their plans to move into new digs. Many simply pivoted and opted for rental homes which provide the look and feel of homeownership without the long-term financial obligations that come with homeownership. Rental numbers for single-family homes and townhomes/condos remained strong throughout 2023. But now, with the first three months of 2024 already in the rear-view mirror, we are seeing positive changes across the wider housing landscape.
With pent-up demand, consumers appear to finally be pushing aside interest rate jitters and returning to the market as enthusiastic buyers. November 2023 marked the first positive month of home sales in 19 months, and the Houston housing market has enjoyed positive sales months in January and February. Anecdotally, we are hearing from HAR member agents that there is general optimism among prospective homebuyers who seem ready to step off the sidelines and get back into the game.
Two key market conditions have created a favorable atmosphere for buyers in 2024. One is an overall moderation in price appreciation compared to where things were during and immediately following the pandemic. The other is a significant growth in inventory that has made a wide array of housing options available. As I counsel my clients all the time, if you see a home that you love, make an offer. I have seen too many clients lose out on the home of their dreams because they thought the price might drop along with interest rates. It would seem that more people are now realizing that if they act now, they may actually be dodging increases in home prices and interest rates.
In February, the latest month for which HAR has compiled sales data, single-family home sales experienced the third increase in the past 12 months, climbing 7.6% year over year with a total of 6,221 units sold across the Greater Houston area versus 5,781 in 2023. The average price rose 4.1% to $400,252, while the median price rose 3% to $329,686.
Days on market, or the actual time it took to sell a home, lowered from 64 to 57. Months of inventory increased to a 3.3-month supply compared to 2.5 months a year earlier. The current national supply stands at 3 months, as reported by the National Association of Realtors.
While I often wish I had a crystal ball to show me the direction of the market, all indications are that Houston housing will remain strong throughout 2024. It is heartening to see more consumers jumping back into the ring as they come to realize that the economic sky is not falling and that this truly is an excellent time to buy a home in Houston.
Thomas Mouton is chair of the board for Houston Association of Realtors®.