HOUSTON — (Realty News Report) — Houston home sales declined 30 percent in November, one of the steepest dives in Texas real estate history.
The Houston Association of Realtors reported 5,827 single-family homes sold in November 2022, down from 8,374 sales in November 2021.
Rising mortgage rates dealt a devastating blow to many would-be homebuyers. The average 30-year mortgage rate last week was 6.33 percent, up from 3.10 percent a year ago, according to Freddie Mac’s weekly survey.
On the positive side, mortgage rates are down a bit in recent weeks, from highs around 7 percent this fall.
Consumers face higher home prices in addition to the higher mortgage rates. Affordability has fallen considerably. Millions of home buyers have been priced out of the market and home ownership is simply not attainable.
“Homebuyer sentiment remains low,” said Sam Khater, Freddie Mac’s chief economist.
But home prices continue to increase as a persistent lack of supply forces values up while heavy inflation lifts the prices of everything, including building materials, lots and labor, in most cases.
Home builders have returned to an old tactic: buydowns on mortgage rates. Mortgage rate buydowns – which are basically subsidies paid for by home builders – were common in the 1980s when mortgage rates, inflation and home prices were high, just like 2022.
According to a survey conducted in early December, 75 percent of home builders are buying down home buyers mortgage rates to make their monthly payments more affordable, reports John Burns Real Estate Consulting.
“Because Houston housing was hyper-energized at the beginning of the year, concern arose when interest rates increased and we began experiencing a consistent decline in sales volume,” said HAR Chair Jennifer Wauhob with Better Homes and Gardens Real Estate Gary Greene. “It’s important to maintain perspective by acknowledging that our market is battling the same forces as the rest of the country, between higher interest rates and prices, inflation and limited inventory. Fortunately, the Houston area has weathered the downturn better than many other markets.”
The average price of a single-family home rose 5.8 percent in November to $403,589 –well below the record high of $438,301 reached in May of this year. The median price increased 7.0 percent to $332,000, which is also below the highest median of all time, $354,000, which was achieved in June 2022.
In Houston, the inventory of home for sale has been increasing following extremely low inventory conditions. Many bidding wares occurred and buyers were paying more than the asking price last year.
Houston now has a 2.9 months supply of homes for sale, up from 1.5 months supply in November of 2021.
The inventory is still tight, however. A 6.0-months supply is generally considered make up a “balanced market,” in which the buyer and seller are on equal footing.
Dec.14, 2022 Realty News Report Copyright 2022.
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