Inventory shrinks to its lowest level in nearly six years
HOUSTON — (October 14, 2020) — Houston’s sizzling summer of home sales extended into September as consumers continued to take advantage of historically low mortgage interest rates amid a pandemic. Once again, the high end of the market experienced the greatest increase in sales volume, with mid-range homes also drawing strong activity. The sales frenzy, combined with a steady decline in the number of homes entering the market in recent months, has sent inventory to its lowest level in almost six years, making a sales slowdown inevitable as would-be buyers are left with a narrower selection of homes.
According to the latest Houston Association of Realtors (HAR) Market Update, 9,101 single-family homes sold in September compared to 7,050 a year earlier. That translates to a 29.1 percent increase and marks the fourth straight month of positive sales.
Homes priced at $750,000 and up leapt 81.5 percent compared to September 2019. That was followed by the $500,000 to $750,000 housing segment, which jumped 58.1 percent year-over-year. Homes between $250,000 and $500,000 – which comprise the market’s biggest share of sales – also achieved significant increases over last year.
The single-family home median price rose 8.3 percent to $265,000 while the average price increased 10.1 percent to $329,801. Both figures are record highs for a September. Year-to-date sales are currently 5.4 percent ahead of 2019’s record pace.
Sales of all property types totaled 11,137 – up 31.9 percent from September 2019. Total dollar volume for the month surged 43.6 percent to $3.4 billion. The lease market cooled in September, with declines in single-family housing while townhouse/condo leases were unchanged year-over-year.
“September sales defied expectations with many Realtors busier than ever, however we anticipate that the pace of sales will soon slow down since there just aren’t a whole lot of homes out there for consumers to buy,” said HAR Chairman John Nugent with RE/MAX Space Center. “Houston real estate has been performing so well, as a matter of fact, that our HAR membership now exceeds 41,000, so a lot of folks are energized about our flourishing industry.”
Lease Property Update
Houston’s lease property market staged a lackluster performance in September. Leases of single-family homes fell 3.9 percent year-over-year while leases of townhomes and condominiums were flat. The average rent for single-family homes rose 5.5 percent to $1,940 while the average rent for townhomes and condominiums increased 6.5 percent to $1,690.
September Monthly Market Comparison
Despite the ongoing coronavirus pandemic, home buyers were out in force in September, still taking advantage of historically low mortgage interest rates even as the selection of available housing dwindled. Houston real estate saw its fourth consecutive month of positive sales. On a year-to-date basis, the market is running 5.4 percent ahead of 2019’s record pace. Single-family home sales, total property sales and total dollar volume all rose compared to September 2019. Pending sales jumped 43.7 percent. However, total active listings – or the total number of available properties – fell 25.4 percent.
The sluggish pace of new listings combined with another month of strong sales drove single-family homes inventory down to a 2.5-month supply versus 3.9 months a year earlier. The last time inventory dropped that low was in December 2014. For September, however, new listings saw a 7.0 percent year-over-year increase. Housing inventory nationally stands at a 3.0-months supply, according to the National Association of Realtors (NAR).
Single-Family Homes Update
Single-family home sales jumped 29.1 percent in September with 9,101 units sold throughout the greater Houston area compared to 7,050 a year earlier. On a year-to-date basis, sales are outpacing last year’s historic volume by 5.4 percent. Strong sales volume at the high end of the market once again pushed pricing upward. The single-family home median price rose 8.3 percent to $265,000 while the average price increased 10.1 percent to $329,801. Both figures are historic highs for a September.
Days on Market (DOM), or the number of days it took the average home to sell, dropped from 56 to 51. Despite a 7.0 percent increase in new listings in September, inventory registered a 2.5-months supply compared to 3.9 months a year earlier and is at levels last seen nearly six years ago, in December 2014. It is also below the current national inventory level of 3.0 months recently reported by NAR.
Broken out by housing segment, September sales performed as follows:
- $1 – $99,999: decreased 23.1 percent
- $100,000 – $149,999: decreased 22.3 percent
- $150,000 – $249,999: increased 18.2 percent
- $250,000 – $499,999: increased 46.7 percent
- $500,000 – $749,999: increased 58.1 percent
- $750,000 and above: increased 81.5 percent
HAR also breaks out sales figures for existing single-family homes. Existing home sales totaled 7,454 in September, up 31.6 percent compared to the same month last year. The average sales price rose 13.4 percent to $325,683 while the median sales price jumped 10.9 percent to $255,000.
For HAR’s new Monthly Activity Snapshot (MAS) of the September 2020 trends, please click HERE to access a downloadable PDF file.
Townhouses and condominiums soared 21.3 percent in September, registering 655 closed sales compared to 540 a year earlier. The average price rose 7.0 percent to $214,337 and the median price increased 4.4 percent to $177,500. Inventory shrank from a 4.5-months supply to 4.0 months.
Houston Real Estate Highlights in September
- Single-family home sales increased for a fourth consecutive month, rocketing 29.1 percent year-over-year with 9,101 units sold;
- The Days on Market (DOM) figure for single-family homes lowered from 56 to 51 days;
- Total property sales shot up 31.9 percent with 11,137 units sold;
- Total dollar volume soared 43.6 percent to $3.4 billion;
- The single-family home median price rose 8.3 percent to $265,000 – the highest median price for a September;
- The single-family home average price increased 10.1 percent to $329,801 – the highest average price for a September;
- Single-family homes months of inventory registered a 2.5-months supply, down from 3.9 months last September and below the national inventory level of 3.0 months. The last time inventory was that low was in December 2014;
- Townhome/condominium sales jumped 21.3 percent, with the average price up 7.0 percent to $214,337 and the median price up 4.4 percent to $177,500;
- Single-family home rentals were down 3.9 percent with the average rent up 5.5 percent to $1,940;
- Townhome/condominium leases were flat with the average rent up 6.5 percent to $1,690.