May 2023 marked the 14th consecutive month of a downtrend in Houston’s home sales. However, there is hope. With the rate of decrease now the smallest in almost a year, there are strong indications that the slowdown may be nearing its end, assuming mortgage interest rates – a key impediment to home purchases nationwide – do not escalate further.
In the May 2023 Market Update from the Houston Association of Realtors (HAR), single-family home sales showed a 10.4% decrease year-over-year, with 8,637 units sold compared to 9,641 in May 2022. Interestingly, this is the smallest slump since June 2022 when the volume declined by 7.6%. In comparison to the pre-pandemic period (May 2019), home sales were down by only 1.3%. An encouraging sign for prospective buyers is the inventory, which currently exceeds the historic lows of 2022, offering more choices as we progress into the peak home-buying season.
Single-family home prices experienced a decrease for the fourth time since spring 2020. The average home price dipped by 1.6% to $431,378, while the median price fell by 3.1% to $340,095. These figures are still below the record highs of $438,350 (average) and $353,995 (median) recorded in May and June 2022, respectively.
According to HAR, total active listings, or the total number of available properties, increased 45.4 percent to 33,919. May sales of all property types totaled 10,476 down 12.5 percent compared to May 2022. As a result, the absorption rate for May 2023 was 31 percent. When compared to Aprils over the past 10 years, this is a pretty healthy absorption level, which should help to stabilize prices.
Compared to last month, listings moved a little more quickly for home sellers. The Days on Market (DOM), or the number of days it took the average home to sell, fell to 48 days in May, down from 62 days in March.
Inventory levels rose in May, reaching a 2.8-months supply, which is slightly higher than the 2.7 months we have seen the majority of this year. Housing inventory nationally stands at 2.9-month supply, according to the latest report from the National Association of Realtors (NAR). A 4.0- to 6.0-months supply is widely regarded as a “balanced market” in which neither the buyer nor the seller has an advantage.
Despite a 14-month slump in home sales, prices have remained fairly stable. Minor yearly price drops have been balanced by steady inventory. The Fed’s pause on additional rate increases is likely to further stabilize the market and prices. This creates a beneficial scenario: buyers can anticipate consistent rates, and sellers need not fear plummeting prices.
Whether the market is booming or slow, be prepared. Make sure you have the information you need to make an informed decision on when to start house hunting or listing your home. 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.
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