Despite the global pandemic, the real estate market in Houston continues to boom. The luxury home market performed particularly well. The biggest concern in the market today is the lack of inventory to meet buyer demand.
As we’ve stated before, in a volatile market, pending sales are one of the best stats we have to track the short term trajectory of the market. Based on Houston MLS data, pending sales in Harris County have dramatically rebounded since the beginning of April and have continued to hold steady over the past couple of months. Based on recent numbers, year to date pending sales are up 4% from the same point in 2019.
According to the Houston Association of Realtors, single-family home sales across greater Houston totaled 9,195 in August compared to 8,673 a year ago, a 6 percent jump. The luxury market (i.e. homes priced at $750,000 and above) performed the best with a 40.3 percent jump compared to 2019. Homes priced between $500,000 and $750,000 also performed very well jumping 34.4 percent year-over-year.
Home prices in August hit historic levels. The single-family home median price climbed 7.6 percent to $269,000 while the average price rose 7.8 percent to $334,256.
According to HAR, total active listings, or the total number of available properties, dropped 23 percent from August of last year. Total sales on the other hand increased 7.3% to 11,121 from August 2019. As a result, the absorption rate for July 2020 was 33% compared to 23% in July of 2019.
Days on Market (DOM), or the number of days it took the average home to sell, lowered from 53 to 51. Due to a slowdown in new listings, single-family home inventory continues to fall, with 2.8 months supply in August versus 4.2-months a year ago. For perspective, housing inventory across the U.S. stands at a 3.1 months supply, according to the most recent report from the National Association of Realtors (NAR). Houston’s inventory level is the lowest level we have seen for August in over 10 years.
**Months inventory estimates the number of months it will take to deplete current active inventory based on the prior 12 months sales activity. This figure is representative of the single-family homes market.
At this point, Houston’s real estate market has rebounded completely and outperforming 2019. Although mortgage rates have increased slightly over the few weeks, they remain near historic lows. The low inventory levels provide a great opportunity for sellers who are looking for a relatively quick sale, and in certain markets, maximize value. For buyers, the low-interest rates provide a historic opportunity to lock in long term rates near unprecedented levels.