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Falling Prices Hurt Houston Home Sales, But 2015 was the Second-Best Year Ever

HOUSTON – Last year was second-best year for home sales Houston, where a decline in the energy industry has battered the region’s economy in recent months.

According to the Houston Association of Realtors, 73,724 single-family homes were sold last year, down 2.4 percent from the 75,535 homes sold in 2014.

Inventories had been tight and Houston’s job growth had been exceptionally strong in recent years, elevating Houston’s home sales to their strongest year ever in 2014. But then oil prices started falling and oil companies laid off employees and reduced spending.

For much of the 2015, the Houston real market seemed to be almost bulletproof as sales outpaced the record-setting sales of 2014.

But in the fourth quarter of 2015, Houston’s home sales began to slide.

In December, only 5,879 homes were sold, almost a 10 percent decline from December of 2014, HAR reports.

Evert Crawford

Evert Crawford

“The next few months will tell us where the market is going,” says Houston economics consultant Evert Crawford, former director of the Institute of Regional Forecasting at the University of Houston. “People in the oil business are waiting, hoping, that this decline in oil will turn around.”

The upper-end of the housing market, homes priced over $500,000, will tend to be more susceptible to the decline in the oil industry, Crawford says.

This week, oil dropped to its lowest level in more than a decade – under $30 a barrel – casting uncertainty over the Texas economy and the housing market.

“With oil dropping to levels around $30 a barrel, I think it’s fair to say that the Houston housing market is going to remain cooler for at least a little while,” says HAR Chairman Mario Arriaga of First Group. “The good news is the local economy is vastly more diversified than it was during the oil bust of the 80s and other industries are continuing to hire, so it really is going to come down to consumer confidence.”

The inventory of homes for sale has remained low, with a 3.2-months supply on the market at year-end, HAR reports.

Houston’s home prices are not expected to fall but they won’t be escalating as rapidly as they have been over the last three or four years, says Cheri Fama, president of John Daugherty Realtors.

“Our outlook for 2016 is very optimistic. There are lots of opportunities,” Fama says.

In 2015, the annual median price of a single-family home was $212,000, up over 6 percent from $199,000 in 2014.

A year ago, Houstonians were hailing a surge in employment that drew home buyers and renters from across the U.S. and around the world. By contrast, the latest Texas Workforce Commission report states that the Houston metro area added just 4,800 jobs in November, making it the third weakest November in 25 years, according to the Greater Houston Partnership, which notes that the region typically adds 10,000 to 12,000 jobs in the month.

In December, the single-family home average price dipped a fractional 0.6 percent year-over-year to $280,201 while the median price—the figure at which half of the homes sold for more and half sold for less—rose 2.9 percent to $216,000. The median figure represents an all-time high for a December in Houston.

December sales of all property types in Houston totaled 6,988, a 9.9-percent decrease from the same month last year. Total dollar volume for properties sold in December slid 10.9 percent to $1.8 billion versus $2.0 billion a year earlier.

Jan. 14, 2015

By Ralph Bivins, editor of Texas-based Realty News Report.

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