Home Prices Jump in Houston

HOUSTON – (By Dale King, Realty News Report) – No small number of real estate folks around Houston offered a not-so-fond farewell to 2023 as they dealt the woes of high mortgage rates and inflationary times.

Many homeowners who had locked-in miniscule 3 percent mortgage rates were unwilling to put their homes up for sale. Inventory was tighter. But in many parts of nation, the prevailing conditions of 2023 resulted in what seemed like a feel-good metric for homeowners – rising home prices.

First American Data & Analytics, a major national provider of property-centric information, risk management and valuation solutions just released its January 2024 Home Price Index (HPI) report which, among other things, states the price of homes in the Houston-The Woodlands-Sugar Land metropolitan area increased by 5.1 percent between January 2023 and January 2024.

That jump puts the Space City in second place among the five metropolitan areas in Texas surveyed by First American in its early-year home price assessment. It also places the cost of single-family dwellings in Houston “in the middle of the pack” of all 30 nationwide metros studied in that survey, said Mark Fleming, chief economist for First American.

The real estate company’s analysis says the Dallas-Plano-Irving MSA topped the Texas home price upsurge with a 5.6 percent increase from January 2023 to January 2024. Next came the Houston area followed by Fort Worth-Arlington-Grapevine, 3.5 percent; San Antonio-New Braunfels, 2.5 percent and Austin-Round Rock-Georgetown, sliding in at -1.8 percent.

However, First American also pointed out that the average price for homes analyzed across the nation increased 7.2 percent between January 2023 and January 2024, leaving Texas a shade or more behind the leaders

Using a home-price analytics tool called “repeat-sales methodology” the First American report showed some states registered extremely strong prices gains in 2023. Average year-over-year price hikes showed hefty increases in states like Connecticut (12.4 percent), Vermont (14.7 percent) and Montana (12.0 percent) to minimal growth in places like Alabama (4.4 percent), Alaska (3.8 percent) and Colorado (2.7 percent).

So, Houston, it seems, didn’t do all that badly.

And here are some other key takeaways from the First American report:

Between December 2023 and January 2024, house prices nationally (and in Houston) increased 0.3 percent.

The cost of homes reached a new peak for the tenth month in a row in January 2024.
Annual house price growth peaked in December 2023 at 7.7 percent.
The five most populous states experienced the following year-over-year growthin the Home Price Index: Pennsylvania (+8.4 percent), Florida (+6.1 percent), Texas (+5.3 percent), California (+4.4 percent) and New York (+4.4 percent).
No states reported a year-over-year decrease in the HPI.

In the report, Fleming explains that “the pace of annualized home price appreciation peaked in December as buyers rushed to take advantage of falling mortgage rates. In January, the preliminary estimate of annualized appreciation cooled modestly by half a percent and is likely to slow down further in the coming months.”

“Despite concern that house prices could have declined significantly at the beginning of 2023,” he noted, “rate-locked potential home sellers kept supply tight by not selling their mortgage-low homes, maintaining pressure to keep prices up” with inventory in short supply.

“While house prices increased in all 30 markets tracked by our index over the last year, this rising tide hides the change in market prices since their peak,” Fleming notes. “Measuring the price change in each market from their post-pandemic peak reveals that house prices are below their prior peaks in 23 of the top 30 markets. Notably, house prices are currently 6 percent or more below their prior peak in six markets, with the largest price declines from peak in Oakland (-13.5 percent), Austin (-9.9 percent) and Seattle (-9.2 percent).”

Looking ahead to the rest of 2024, Fleming cited the presence of “optimism that mortgage rates will fall, providing the incentive for more homeowners to sell, boosting supply and, in turn, improving affordability for buyers.”

“While more supply and improved affordability should cool post-pandemic hot house price appreciation, 2024 may still be the year that house price appreciation doesn’t get too cold, but closer to just right.”

Methodology

The First American Data & Analytics HPI report measures single-family home prices, including distressed sales, with indices updated monthly beginning in 1980 through the month of the current report. HPI data is provided at the national, state and metro levels and includes preliminary index estimates for the month prior to the report (i.e. the preliminary result of July transactions is reported in August).

HPI uses a repeat-sales methodology, which measures price changes for the same property over time using more than 46 million paired transactions to generate the indices. In non-disclosure states, the HPI uses a combination of public sales records, MLS sold and active listings and appraisal data to estimate house prices.

Photo credit: Mark Rose, photographed by Jamie Kelter-Davis of Women Photograph

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