Houston’s housing market performed reasonably well in 2023, despite declining sales every month throughout the year.
After disappointing sales expectations throughout the pandemic, the market seized on 2023 as a time for normalization when it quickly became clear that people needed housing just as much as they did before the global crisis. As we enter the final weeks of the year, housing inventory has significantly improved and prices are under control. Both of these factors have reached alarming extremes during the pandemic, with housing prices exceeding what many can afford, limiting housing options and leaving many prospective homebuyers unsure. Ta.
A major challenge for real estate in Houston and across the country right now is mortgage interest rates, which have recently risen to their highest levels in nearly 20 years. After starting 2023 at 6.48%, the average 30-year fixed-rate mortgage rose to a new 2023 high of 7.79% in the week ending Oct. 26, according to Freddie Mac. This is the highest level since November 2000.
This upward trend is not only hindering home sales, but also driving prospective home buyers into the rental market, buying rental homes that offer the look and feel of homeownership until mortgage rates drop, and remortgaging them again. This increases the possibility of considering. buying a house. That’s when I tell reporters and customers who ask me what’s going to happen that, unfortunately, I don’t have a crystal ball, so I have no idea what’s going to happen with mortgage rates. That will depend on the Fed’s actions to take the steps it deems necessary to curb inflation.
One positive news in HAR’s latest October housing report was that home sales across Greater Houston were down just 3.4%, the lowest monthly decline this year. Second, the number of months of housing supply rose to 3.6 months, the highest level since November 2019. Second, pricing continued to ease, with the average price rising just 0.4% to $403,556, but the median price falling 0.9% to $327,000. These numbers are well below the all-time highs of $438,350 (average) in May 2022 and $354,000 (median) in June 2022.
Another bright spot in the Houston housing market in October was a 21.3% increase in sales of homes priced at $1 million or more, or considered upscale. That followed months of declining sales across all price points. Bright spots are always welcome. With that in mind, let’s return to the leasing market, which has seen solid consumer interest year-round.
Rental prices for single-family homes rose 4.3% in October compared to the same month last year, with the average rental price rising 2.2% to $2,231. The number of new listings for single-family rental properties increased by 9.8%, providing ample supply of housing to meet stable demand.
It’s worth noting that when HAR publishes monthly housing reports (most of which are published in Houston Agent Magazine), we cover a vast area that encroaches on the Houston metropolitan market. There is no specific mention of regions that are doing well or facing challenges. That’s why we emphasize that real estate is local. This means that despite the broad strokes of our report, each region has its own sales trends. That’s why we encourage all consumers to use the services of a real estate agent with expertise in the markets they serve when buying, selling, or renting a home.
We hope everyone has a great holiday season and that 2024 is an even better year for Houston housing.
Kathy Treviño will become the 2023 President of the Houston Association of Realtors.