Over the past couple of weeks, the City of Houston has become a primary focus of the recent uptick in Coronavirus cases. Despite the increase in the local Infection rate and additional restrictions on bars and restaurants, the real estate market continues to see a flurry of home sales throughout Houston.
As we’ve stated before, in a volatile market, pending sales are one of the best indicators 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 5 weeks. Based on recent numbers, year to date pending sales are statistically flat from 2019. This bounce-back continues to be driven by mortgage rates near historic lows and increased demand from home shoppers looking for a tad more space in which to social distance.
According to the Houston Association of Realtors, single-family home sales across greater Houston totaled 9,328 in June compared to 8,063 a year ago, a 15.7 percent jump. Homes priced between $250,000 and $500,000 led the way among all segments, rising 28.3 percent year-over-year. The second-best performer consisted of homes in the $500,000 to $750,000 range, which jumped 18.6 percent.
Home prices in June also showed resiliency. The single-family home median price increased 3.6 percent to a historic high of $262,000. Average home prices dipped less than one percent from June of 2019 to $319,881. Considering the disruption Coronavirus has had on the market, these numbers come as welcome news to prospective sellers.
According to HAR, total active listings, or the total number of available properties, dropped 17.5 percent from June of last year. Total Sales on the other hand increased 18.3% to 7,917 from June 2019. As a result, the absorption rate for June 2020 was up to 26% from 21% in June of 2019. We have to go all the way back to 2016 to find a lower absorption rate for June.
Days on Market (DOM), or the number of days it took the average home to sell, was flat from last month at 56 days. Due to a slowdown in new listings, single-family home inventory continues to fall, with 3.2-months supply in June versus 4.3-months a year ago. For perspective, housing inventory across the U.S. stands at a 4.9 months supply, according to the most recent report from the National Association of Realtors (NAR). This inventory level is the lowest level we have seen in June since 2015.
**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 almost completely. Although there are some price points and property types that haven’t recovered fully, the current state of the market appears to be healthy. Low inventory levels appear to be stabilizing prices and actions by Congress are helping to keep distressed home sales down.
As many prospective home buyers continue to wait on the sidelines for a more buyer-friendly market, it may never come to some sub-markets. With interest rates nearing all-time lows, it might actually make sense for some home buyers to evaluate their options in the shorter term. Check out our article titled, Is a Buyer’s Market coming to Houston?, to take a deeper dive into this topic.
For home sellers, low inventory levels should encourage some home sellers to enter the market sooner rather than later. Low inventory levels, in general, tend to put upward pressure on prices and help encourage quicker sales.
As always, these decisions are very individual and local so make sure you discuss your options with a professional in your area.