HOUSTON – (Realty News Report) – Houston’s home sales surged to record sales in February, but the housing market is facing strong headwinds as the spring homebuying seasons opens.
The Houston economy will be impacted significantly by a decrease in oil prices on top of an economic slowdown associated with the coronavirus pandemic. Oil prices crashed over the weekend with West Texas Intermediate oil dropping from around $40 a barrel to the low $30s. The oil’s decline is expected to result in layoffs in Houston and cutbacks in oil company spending. Many oil drillers can’t break even when prices are this low.
Low mortgage rates, with 30-year fixed-rates below four percent, provided fuel to the housing market, prior to the acceleration of coronavirus outbreak.
“The Houston housing market gained momentum in February, thanks largely to record low mortgage rates that some economists say could drop even further,” said HAR Chairman John Nugent with RE/MAX Space Center.
“Concerns have been raised about the possible effects the coronavirus outbreak might have on our real estate market and others around the country, and that is something HAR is monitoring. Coronavirus was not a factor in the February housing data, but obviously with the losses that Wall Street has suffered as well as declining oil prices, we are keeping a watchful eye on housing market activity.”
HAR reported 6,044 single-family homes were sold in February compared to 5,339 a year earlier, a 13.2 percent increase. The home sales recorded in February 2020, represented the highest sales total ever for a February in Houston.
The single-family home median price (the figure at which half of the homes sold for more and half sold for less) rose 5.2 percent to $245,000 and the average price climbed 5.9 percent to $301,648. Both figures represent the highest prices ever for a February.
Low mortgage rates typically fuel housing activity and in recent days, consumers have rushed to refinance. But with the overall economy on shaky footing, the pace of home sales may not follow the expected trends.
“The U.S. housing market has a very large demographic tailwind behind it – Millennials and Gen Z – that is going to be tough to stop,” said Ralph McLaughlin, chief economist and senior vice president of analytics at Haus, in a social media post. “Short-run headwinds to the broader economy, such as a viral outbreak, may mute sales this spring season, but I think it will be short-lived.”
March 11, 2020 Realty News Report Copyright 2020
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