HOUSTON — (June 14, 2023) — The Houston housing market saw its 14th month in a row of lower home sales in May, but the drop in volume was the smallest in almost 12 months. This and other signs of easing declines in the market may suggest that the worst part of the sales slump is behind us, as long as mortgage interest rates don’t go up any more – a key factor that discouraged home buyers in Houston and nationwide for most of 2022 and all of 2023
The May 2023 Market Update from the Houston Association of Realtors’ (HAR) shows that single-family home sales fell 10.4 percent from a year ago, with 8,637 units sold versus 9,641 in May 2022. That is the smallest decline since June 2022 when volume decreased by 7.6 percent. Compared to May 2019 before the pandemic, home sales were only 1.3 percent lower. Also, inventory is much higher than the record lows of 2022, giving more choices to potential buyers as we enter the peak of the homebuying season.
Only the housing segment below $100,000 saw growth in May compared to 2022. Single-family rentals continued to benefit from high consumer demand as many potential homebuyers chose to rent homes instead of buying them due to worries about interest rates and inflation. HAR will release its May 2023 Rental Home Update on Wednesday, June 21.
“Houston housing has been in negative territory for 14 months, however this latest report showed a notable easing in declines and may be a bellwether of improving market conditions ahead. Unfortunately, there still are looming influences out there that remain out of our control, including interest rates, a possible deepening of inflation or a drift toward recession. Any one of those could slam the brakes on home sales.” (HAR Chair Cathy Treviño)
Single-family home prices dropped for the fourth time since spring 2020. The average price went down 1.6 percent to $431,378 and the median price decreased 3.1 percent to $340,095. That keeps pricing under the record highs of $438,350 (average) in May 2022 and $353,995 (median) in June 2022.
May Monthly Market Comparison
May was the 14th month in a row of lower sales as Houston and other real estate markets across the country still face ongoing economic challenges. Single-family home sales fell 10.4 percent from a year ago, but compared to May 2019, before the pandemic, sales only declined 1.3 percent, and compared to May 2018, five years ago, they rose 6.4 percent.
Besides the decline in single-family home sales, total property sales and total dollar volume also dropped below last year’s levels, but at smaller rates of decrease than in previous months. Single-family pending sales fell 2.3 percent. Active listings, or the total number of available properties, were 45.4 percent higher than the 2022 level.
Months of inventory kept getting better in May, growing to a 2.8-months supply. Housing inventory nationally is at a 2.9-months supply, according to the latest report from the National Association of Realtors (NAR). A 4.0- to 6.0-months supply has long been considered as indicating a “balanced market” in which neither the buyer nor the seller has an advantage.
Single-Family Homes Update
Single-family home sales dropped 10.4 percent from a year ago in May with 8,637 units sold in the Greater Houston area versus 9,641 in 2022. Pricing keeps easing after hitting record highs last spring. The average price in May went down 1.6 percent to $431,378 and the median price decreased 3.1 percent to $340,095. February 2023 was the first time the Houston housing market saw pricing drops in more than two years.
For a comparison before the pandemic, May sales were only 1.3 percent lower than May 2019, when a total of 8,749 single-family homes sold. The median price of $340,095 in May 2023 is 36.0 percent higher than it was in 2019 ($250,000) and the average price of $431,378 today is 34.3 percent higher than it was then ($321,323). Sales are 6.4 percent higher than they were five years ago, in May 2018, when volume was 8,117. Back then, the median price was $244,015 and the average price was $305,245.
Days on Market, or the actual time
it took to sell a home, went up from 30 to 48 days. Months of inventory showed
a 2.8-months supply compared to 1.5 months a year ago. The current national
supply is at 2.9 months, as reported by NAR.
Broken out by housing segment, May sales performed as follows:
- $1 - $99,999: increased 11.1 percent
- $100,000 - $149,999: decreased 12.3 percent
- $150,000 - $249,999: decreased 6.7 percent
- $250,000 - $499,999: decreased 9.4 percent
- $500,000 - $999,999: decreased 15.2 percent
- $1M and above: decreased 15.5 percent
HAR also reports sales figures for existing single-family homes. Existing home sales were 6,484 in May, down 16.2 percent from the same month last year. The average price dropped 2.6 percent to $431,582 and the median sales price fell 4.6 percent to $334,000.
Townhouse/Condominium Update
Townhouses and condominiums saw their 12th month in a row of lower sales in May, dropping 26.1 percent from a year ago with 614 closed sales compared to 831 a year earlier. The average price decreased 3.7 percent to $262,015 and the median price fell 6.0 to $216,300. Inventory rose from a 1.3-months supply to 2.6 months, the highest level since March 2021.
Compared to May 2019 before the pandemic, when 665 units sold, townhome and condominium sales fell 7.7 percent. The average price then, at $211,346, was 24.0 percent lower and the median price, at $171,604 was 26.0 percent lower.
Houston Real Estate Highlights in May
- Single-family home sales were down 10.4 percent year-over-year, the 14th consecutive month of slowing sales volume but the lowest rate of decline since June 2022, suggesting that improved market conditions may be looming;
- Compared to pre-pandemic 2019, single-family home sales were down just 1.3 percent, however they were up 6.4 percent versus the volume five years ago, in May 2018;
- All housing segments experienced sales declines except homes priced below $100,000;
- Days on Market (DOM) for single-family homes rose from 30 to 48 days;
- Total property sales fell 12.5 percent with 10,476 units sold;
- Total dollar volume dropped 12.7 percent to $4.3 billion;
- The single-family median price dropped 3.1 percent to $340,095;
- The single-family average price fell 1.6 percent to $431,378;
- Single-family home months of inventory registered a 2.8-months supply, up from 1.5 months a year earlier;
- Townhome/condominium sales experienced their 12th straight monthly decline, falling 26.1 percent, with the median price down 6.0 percent to $216,300 and the average price down 3.7 percent to $262,015;
- Compared to pre-pandemic 2019, townhome and condominium sales were down 7.7 percent.