Home sales in the Houston area were slower than expected in January, which is typical for the post-holiday season. However, there are positive signs for potential homebuyers this year, including a stronger inventory and more reasonable prices. According to the Houston Association of Realtors' (HAR) Market Update for January 2023, sales of single-family homes fell by 29.9 percent, marking the tenth straight monthly decline. Despite this, sales were down only 4.6 percent compared to January 2020, before the pandemic. All housing segments saw a decline in sales in January, while the rental market had solid growth. Single-family home prices also rose at a slower pace than in previous months, increasing by just 1.5 percent on average. If mortgage rates stabilize and home prices remain affordable, an increase in home sales is expected later in the year.
January Monthly Market Comparison
The Houston housing market experienced its tenth consecutive month of declining sales in January due to various economic challenges, such as inflation, high interest rates, pricing, and low inventory. Although year-over-year single-family home sales fell by 29.9 percent, the decline was only 4.6 percent compared to sales in January 2020, just before the pandemic, and sales were up 1.9 percent compared to January 2018. The monthly housing measurements for January revealed mixed results, with total property sales and total dollar volume falling, and single-family pending sales dropping by 14.9 percent. However, active listings increased by 63.4 percent compared to the previous year, and months of inventory also improved, reaching a 2.7-month supply, which is better than the national average of 2.9 months. A balanced market typically has a 4.0- to 6.0-month supply, which is advantageous for both buyers and sellers.
Single-Family Homes Update
In January, there was a 29.9 percent drop in sales of single-family homes in the Greater Houston area compared to the previous year, with only 4,549 units sold. Home prices, which had reached record highs in the past, are now becoming more reasonable, with the median price increasing by 1.6 percent to $315,000, and the average price rising by 1.5 percent to $381,983. These price increases are the lowest since October 2019.
To put the current state of the housing market in perspective, January 2022 sales were down 4.6 percent compared to the same month in 2020 when 4,772 single-family homes were sold. However, the median price at that time was much lower, at $235,000, and the average price was $289,952, both of which were significantly less than current prices. Sales were 1.9 percent higher than in January 2018, when 4,462 homes were sold, with median and average prices much lower at $218,950 and $271,087, respectively. This indicates that home prices have risen considerably over the past five years.
The time it took to sell a home, as measured by "Days on Market", increased significantly from 39 to 59 days. The supply of available homes, as measured by "Months Supply", was 2.7 months in January, compared to just 1.3 months in the same month the previous year. The current national supply of homes stands at 2.9 months, according to the National Association of Realtors (NAR).
January sales broken out by housing segment:
- $1 - $99,999: decreased 17.0 percent
- $100,000 - $149,999: decreased 24.3 percent
- $150,000 - $249,999: decreased 35.1 percent
- $250,000 - $499,999: decreased 29.6 percent
- $500,000 - $999,999: decreased 22.6 percent
- $1M and above: decreased 25.7 percent
The Houston Association of Realtors (HAR) provides separate sales figures for existing single-family homes, which totaled 3,255 in January, representing a 36.8 percent decrease from the previous year. The average and median sales prices of these existing homes remained the same, at $374,519 and $300,000, respectively.
The number of closed sales for townhouses and condos declined for the eighth month in a row, with 353 units sold in January compared to 561 the previous year, marking a 37.1% drop. The average price of these units decreased by 4.3% to $230,775, and the median price fell by 7.7% to $191,000, which are both lower than the record highs achieved in April 2022. Inventory for these properties increased from a 1.5-months supply to 2.1 months.
- Single-family home sales decreased 29.9 percent year-over-year
- All housing segments saw negative sales.
- Days on Market (DOM) for single-family homes increased from 39 to 59 days;
- Total property sales dropped 30.9 percent with 5,650 units sold;
- Total dollar volume fell 30.9 percent to $2.0 billion;
- The single-family average price increased 1.5 percent to $381,983;
- The single-family median price went up 1.6 percent to $315,000;
- Single-family home months of inventory showed a 2.7-months supply, up from 1.3 months
- Townhome/condominium sales registered their
eighth consecutive monthly decline, falling 37.1 percent, with the average
price down 4.3 percent and the median
up 7.7 percent