HOUSTON – Houston Association of Realtors is predicting a 10 to 12 percent decline in home sales in 2015 because falling oil prices will hurt the local housing market.
Falling oil prices could reduce job creation in Houston next year to only 65,000 new jobs – almost half of the 120,000 new jobs Houston gained in 2014, the Realtors association said. Slower job creation in 2015 will be a drag on home sales next year, the Realtors association said.
West Texas Intermediate, the benchmark for American crude, took a huge tumble Wednesday falling below $61 a barrel, the lowest level since 2009. Earlier this year, WTI oil was trading at over $100 per barrel.
HAR Chair Chaille Ralph with Heritage Texas Properties said in a news release: “I have been asked whether falling oil prices could impact housing in 2015, and Stewart Title Chief Economist and former HAR Chairman Ted C. Jones, Ph.D., has forecast a 10 to 12 percent decline in home sales in the next 12 months, with about a 6.0 percent increase in prices.”
Houston is having its strongest year ever for home sales in 2014. So even if sales slowdown more than 10 percent in 2015, the local housing market will still be fairly good.
HAR reported single-family home sales totaled 5,092 units in November, an increase of 1.8 percent compared to November 2013.
In November, the inventory of Houston area homes for sale was exceptionally small. Months of inventory, the estimated time it would take to deplete the current active housing inventory based on the previous 12 months of sales, dipped to a 2.7-months supply versus a 2.9-months supply in November 2013.
With the inventory tight, home prices increased sharply. The average price of a single-family home jumped 10.3 percent from last November to $271,232.
On a positive note, the low-end of the housing market will be getting a boost from relaxed lending standards. In recent years, the National Association of Realtors had voiced concerns that overly tight lending guidelines were preventing young people from being able to buy a home.
But new rules just established by the government-chartered Fannie Mae and Freddie Mac will allow some buyers to get a mortgage with only 3 percent down payment. The first wave of those new rules will go into effect this weekend, said Houston mortgage lender Gail Evans of On Q Financial.
The lenders have a lot of stipulations and require a minimum FICO credit score of 620.