Houston housing market is improving

The housing market is showing signs of life after veering into a dead zone late last year.

Driving the news: Pending home sales were up 3% nationwide in December, according to Redfin's proprietary measure.

• That was the first monthly increase since October 2021, reports Axios' Emily Peck.

Why it matters: These green shoots are a good sign for the economy overall, and run counter to some of the dire predictions made last fall.

What's happening: Home buyers are making peace with higher mortgage rates, and sellers are making peace with the need to cut prices.

Between the lines: Mortgage rates are dropping. Rates peaked at over 7% in November but have dropped to an average rate of 6.13% on a 30-year mortgage, per Freddie Mac data from last week.

• That's the lowest level since mid-September.

The intrigue: Houston is a top destination for out-of-state buyers looking to relocate to a cheaper market.

• Houston ranked ninth nationally among markets home buyers moved into, just behind Dallas, which ranked sixth.
• The biggest influx of new residents came from New York — not California, surprisingly.

What they're saying: Houston Association of Realtors chair Cathy Treviño said that while Houston is not seeing the same volume of sales as last January, there are signs of more activity, "pointing in the right direction."

• "Home buyers and sellers are starting to get accustomed to what our market is and understanding that the 3% [interest rate] was just not a normal market. … People still need to buy homes and sellers still need to sell."

Zoom in: Single-family home sales for 2022 in Houston were down 10.9% compared to 2021's record high, marking the first decrease since 2015, according to HAR.

• The median sale price for single-family homes in 2022 was $338,295, 12% higher than in 2021.
• In December, sales for single-family homes dropped 32.6% year over year and the median sales price was $330,000, 3.8% higher than last year.

The bottom line: Home buyers and sellers have adjusted their expectations. What once seemed high now seems like sort of a deal.