HOUSTON – Houston’s home sales hit an all-time record in 2013 as low mortgage interest rates and strong job growth lifted the home market to a near-frenzy that won’t be matched again in 2014.
A total of 73,232 single-family homes were sold in 2013, topping the previous annual record of 72,376 sold in 2006, according to the Houston Association of Realtors.
“The Houston housing market had its best year on record in 2013, and those of us who work in real estate have never been busier,” says HAR Chair Chaille Ralph of Heritage Texas Properties.
Houston’s inventory of homes for sale was low all year long, and it continues to be very tight. In December it dipped to a 2.6 months supply, an all-time low. A balanced real estate market – where buyers and sellers are on equal footing – is considered to be a 6-month supply. So at the current conditions sellers have a strong advantage. A year ago, Houston had a 3.7 months supply, which was considered exceptionally low.
The national inventory rate currently is a 5.1 month supply of homes for sale, according to the National Association of Realtors.
For the year, Houston’s 2013 single-family home sales were up 17 percent over 2012, the Realtors association reported. Some experts believe this pace of growth cannot be maintained.
“I think there is a chance things will slow down. There’s been a buying frenzy and that may abate somewhat,” says housing analyst Evert Crawford of Crawford Realty Advisors. “You can’t think things can go on abnormally strong forever.”
Ted Jones, chief economist of Stewart Title, predicts that the 2014 will continue to be excellent, but this year’s sales will only be up about 5 percent over 2013, instead of the phenomenal pace of gains registered of last year. Jones predicts local home prices will rise about 6 percent in 2014.
Cheri Fama, president of John Daugherty Realtors, said 2014 will be an improvement over 2013, but the surge probably won’t match last year’s.
“I can’t say it will shoot up rapidly,” Fama said. “But we can continue at this pace for the next several years.”
A total of $20.9 billion of residential real estate was sold in Houston in 2013, a 30 percent increase over 2012. This year sales could be even higher, but no one is expecting another 30 percent increase on top of last year’s big gains.
A moderation of job growth will contribute to the slight cool-down in the frenzied boom. After Houston’s gain of 86,000 jobs in 2013, economists are now projecting 70,000 new jobs, or fewer, will be created in 2014.
Mortgage rates are expected to continue to rise, taking a little more steam out of the market. Lawrence Yun, chief economist of the National Association of Realtors, predicts 30-year fixed-rate mortgages will be at 5.4 percent by the end of 2014, up from the current rate of 4.5 percent.
Looking at the results for 2013, racking up more than 73,000 homes is a big increase. A decade ago, in 2003, there were 65,000 home sales. Going even further back, the city had 34,000 sales in 1993 and 13,000 in 1983. Of course, Houston was a much smaller place back then.
For the homes sold last year, the Realtors association reported an annual average home price of $248,591, a 10 percent increase over 2012.
The median price for a Houston home sold in 2013 was $180,000. By comparison, the median price of a home sold ten years ago, in 2003 was $143,000. The median price indicates half the homes sold for more and half for less.