After a booming period in real estate between 2021 and early 2022, the Houston market has gradually settled into a more typical pattern. This has resulted in an increase in both Days on Market and Inventory levels, and a decrease in market absorption of active listings. Mortgage rates also experienced some fluctuation in January, hitting a six-month low in the middle of the month before rising again in recent weeks. Thanks to relatively low home listing inventory, home prices are expected to flatten out or increase in most neighborhoods in the coming months.
According to the latest report from the Houston Association of Realtors (HAR), 4,549 units were sold in January compared to 6,492 in January 2021. That marks the 10th straight month of declining sales activity. However, when compared to January of 2020, the January before the pandemic, sales were down just 4.6 percent.
Despite falling sales activity, home prices are still up year-over-year. The average price increased just 1.5 percent to $381,983. The median price rose just 1.6 percent to $315,000. Those are the lowest price increases since October 2019.
According to HAR, total active listings, or the total number of available properties, increased 63.4 percent to 33,606. January sales of all property types totaled 5,650, down 30.9 percent compared to January 2022. As a result, the absorption rate for January 2022 was 17 percent. This is in line with the average January over the past 10 years. However, it is down considerably from the crazy high absorption we have seen over the past 2 years.
The Days on Market (DOM), or the number of days it took the average home to sell, rose to 59 days in January, up from the 39 days on market we saw last January.
Inventory levels fell from the 2.9 months of supply we saw in November. However, they are still up considerably compared to early 2022. In January, we had a 2.7-months supply of available homes. In January 2022, we only had 1.3 months. Housing inventory nationally stands at 2.9 months supply, according to the latest report from the National Association of Realtors (NAR).
A 6.0-month supply is generally considered a “balanced market”. By historic standards, we are still in a Seller’s market, but buyers are definitely finding more options than at any time over the past 2 years.
The market has been experiencing a lot of uncertainty due to the recent fluctuations in mortgage rates. However, with current inventory levels, it’s expected that home prices will either moderately increase or remain stable during the second and third quarters. The Houston economy is performing well, with decreasing unemployment rates and increasing hourly earnings. If there is positive news regarding inflation, resulting in lower mortgage rates, we may see a sudden rise in demand for housing.
Whether this spring going to be the right time for you to buy or sell is going to be dependent on your specific circumstances and location. Talk to a professional so you can determine if 2023 is going to be a good time for you.
Contacting a Norhill Realtor is a good place to start. Get connected with one of our experienced agents who can talk you through the market in the neighborhoods you care about as well as discuss the timing for either selling or buying.