HOUSTON – (By Ralph Bivins of Realty News Report) – Record setting heat ignited the Houston housing market in June as low mortgage rates and low inventory lifted home prices to record highs.
A total of 13,090 properties – including single-family homes, condos, townhomes and lots – were sold in June, the highest monthly sales total in the Houston real estate history, according to the Houston Association of Realtors.
The sales pace sizzled. The official statistic called Days on the Market (or “DOM” in Realtor-speak) dropped significantly to 29 days. But anecdotally, it was widely known that homes went under contract with record speed and listings attracted multiple offers.
Many homes sold for over asking price. One report out of Austin, which is much smaller market than Houston, said 1,500 homes sold for more than $100,000 over the original listing price.
The Houston area now has a 1.5 months supply of homes for sale – a microscopic inventory that was previously unimaginable until this 2021 bull market.
One of the root causes of the inventory shortage, which is a national issue, is that home construction has been insufficient for years. The United States has a 5.5 million-unit deficit of housing construction, the National Association of Realtors says. The country needs 2 million single-family homes and 3.5 million multifamily units to be built ASAP. The Realtor group said housing should be addressed by Congress in the infrastructure bill.
Major home investors have been gobbling up inventory also. The Blackstone Group recently agreed to pay $6 billion to acquire Home Partners of America, which owns 17,000 rent houses across the nation. Blackstone is paying all cash.
Brand-new homes are swallowed up in the build-to-rent trend and mom-and-pop investors are scooping up properties as well.
“The Houston housing market is in overdrive right now, and we know anecdotally that out-of-town investors have contributed to the frenzy,” said HAR Chairman Richard Miranda with Keller Williams Platinum. “We saw similar investment activity following Hurricane Harvey, and within a few months, the market stabilized. We expect stability to return this time around, so anyone in the market for a home who is frustrated by current market conditions needs to be patient.”
Over the last year, Realtors have been warning that the lack of inventory will slow down sales. But it hasn’t.
June the market’s thirteenth consecutive positive month of sales. On a year-to-date basis, home sales remain 25.9 percent ahead of 2020’s record pace. With this large of a lead over 2020, Houston Realtors have a lock on 2021 being another record year.
Houston’s June sales totaled a record $4.8 billion, a 43 percent gain over June of last year. And June of last year was exceptional, despite Covid.
Houston’s single-family homes sales were up 13.6 percent compared to last June, with 10,638 units sold versus 9,362 in June of 2020.
The single-family home average price rose 23.7 percent to $395,316 and the median price increased 20 percent to $314,500.
It’s rising prices that will slow down the market eventually, not the lack of inventory. Even with mortgage rates a 3 percent, the upward movement in prices blocks out more buyers at the starter-home end of the chain. Millennials finally arrived into the housing market, but many are first-time home buyers without equity from a prior home. So 20 percent price gains are a big stop sign.
Around the nation, there are reports that sales are moderating a bit. And with the recent home price jumps, normalcy may return to the Houston market soon.
July 15, 2021 Realty News Report Copyright 2021
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