The Houston real estate market again set new records in May 2021 as homebuyers continued to take advantage of historically low interest rates. Limited supply and strong demand helped push sales activity almost 50% higher than May of 2021 and home prices hit all-time highs.
According to the latest report from the Houston Association of Realtors (HAR), 9,702 single-family homes sold in May compared to 6,546 a year earlier for a 48.2 percent increase. That represents another record one-month year-over-year sales volume increase and the market’s 12th consecutive positive month of sales. As we stated last month, we have to put these numbers in context. In May 2020, the global pandemic was only in its 3rd month. Although sales activity had started to rebound, they had not recovered completely.
The luxury market (homes priced over $750,000) continued to lead the way in sales volume in Ma with a 291 percent year-over-year increase. That was followed by homes priced between $500,000 to $750,000, which rose 166 percent.
With luxury and high-end homes leading the way, home prices again hit record levels. The single-family home average price rose 29.7 percent to $387,105 and the median price increased 21.7 percent to $304,000.
According to HAR, total active listings, or the total number of available properties, fell 40.6 percent to 22,607. May sales of all property types totaled 12,100, up 55.5% compared to May of last year. As a result, the absorption rate for May 2021 was 43%! That means almost half of all homes listed went under contract in May. That’s a dramatic number when compared to the previous 10 years.
Homes moved a little faster in May. Days on Market (DOM), or the number of days it took the average home to sell fell to 34 days in May. Single-family homes inventory remained at just 1.4 months. Inventory has now held at 1.4-months for three straight months and continues to work in the seller’s favor.
There is no denying that this is a great time to be a home seller and the current activity in the market should sustain through the end of the summer. However, we have already seen some recent week-over-week declines in pending sales numbers, which could be a sign that home sales could slow somewhat. For prospective homebuyers, it will be important to be prepared. As the market slows, there may be an opportunity to take advantage of a more balanced market and still lower than normal interest rates. As Network Funding recently broke down, even small increases in interest rates can have a big impact on the cost of homeownership over the life of your loan.
Be prepared. Make sure you have all of the information you need to make an informed decision on when to start house hunting and buying. Contacting a Norhill Realtor is a good place to start. One of our experienced agents can talk you through the current state of the market in the neighborhoods you care about and get you connected with an experienced, professional mortgage broker so you can decide on the timing that works for you.