Despite inventory challenges, the market for new homes in Houston is showing signs of improvement. A new report from HomesUSA.com revealed that new homes are staying on the market longer and prices and sales are stabilizing. 

Demand has been trending up since the beginning of the pandemic.

The pace of new home listings is gaining steam, a welcome development in the face of high demand from buyers, Redfin reported.

Buyers faced bidding wars as more rushed to purchase a home before mortgage rates jumped again.

“Given the situation in the market — mortgages, home costs and inventory — it would not be surprising to see a retreat in housing demand.” — NAR chief economist Lawrence Yun 

The Houston area had more than 392,000 single-family home building permits from January 2012 to December 2021, the report said. 

“Builders are entering 2022 with backlogs that they are having a hard time completing due to material and labor shortages, and new-home prices are sitting near a historic high.” — First American Deputy Chief Economist Odeta Kushi

While rising interest rates may lead to more reductions in the housing supply, it may also bring some much-needed balance to the market.

Mortgage applications fell more than 13% in the most-recent week tracked by the Mortgage Bankers Association’s Market Composite Index, while interest rates continued to rise. 

“Production disruptions are so severe that many builders are waiting months to receive cabinets, garage doors, countertops and appliances.” — NAHB Chairman Jerry Konter 

The sales pace of existing homes surged 6.7% in January after falling in December, as buyers got off the fence and went shopping ahead of rising interest rates, the National Association of Realtors reported.

Single-family housing starts fell 5.6% from December’s revised estimate to 1,116,000, while multifamily starts slid 2.1% to 510,000, the U.S. Census Bureau and the U.S. Department of Housing and Urban Development said.

The average contract interest rate for 30-year fixed-rate mortgages backed by the Federal Housing Administration increased to 3.93% from 3.86%, the Mortgage Bankers Association said. 

New listings dropped 17.9% — from 2,944 to 2,417 — for the week ending Feb. 7, compared to the same week last year.  

Across the country, 10% of ZIP codes with the largest share of children had an average home value growth of 21.3% from October 2020 to October 2021.

Home-price growth could slow by the end of 2022, despite the housing market breaking records in January.