Jun 16, 2023 - Real Estate

Houston housing market on its way to stabilizing

Houses made out of money

Illustration: Aïda Amer/Axios

Houston home sales decreased again in May compared to a year ago, declining for the 14th straight month, according to a new Houston Association of Realtors (HAR) report.

Why it matters: The decrease in home sales volume was the smallest it's been in almost a year, which could be a sign of improving market conditions ahead, HAR chair Cathy Treviño said in a statement.

Driving the news: There were 8,637 units sold in May 2023, compared to the 9,641 sold in May 2022 — a 10.4% year-over-year decrease and a 1.3% decrease from 2019.

What they're saying: "Usually a decline wouldn't be something that we'd be excited about. But we've seen 14 months now of declines in home sales, really coming off that peak that we had during the pandemic," Jennifer Wauhob, HAR's previous chair, tells Axios.

  • "It means that, I think, we are through the worst of the slowdown and things are starting to stabilize, we're starting to see a few more home sales and things are starting to look better overall," Wauhob says.

Yes, but: There can still be outside influences — like hikes in mortgage interest rates, a possible deepening of inflation or a drift toward recession — that could "slam the brakes on home sales," Treviño says.

By the numbers: Single-family home prices are continuing to fall. In May, the median price of a home in Houston was $340,095, down 3.1% from last year's median of $350,900.

  • Homes under $100,000 actually saw a year-over-year increase in purchases in May by 11.1%.
  • Single-family homes in May had 2.8 months' inventory, up from 1.5 months' inventory last May.

Go deeper: While home prices are declining and Houston is one of the rare markets where buying is cheaper than renting, affordability remains a concern, especially as the monthly payment for a median-priced home purchased in April is nearly $900 higher (65.9%) than it was three years ago, per the Greater Houston Partnership's analysis of HAR and Freddie Mac data.

What's next: Wauhob expects interest rates, as well as Houston inventory and sales, to continue to improve.

  • "If you're a buyer and you've been kind of on the fence, now would really be a good time to start paying attention," she says.
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