Home sales sag, but rentals surge; inventory grows

Fresh on the heels of a record-breaking 2018, home sales across greater Houston began the new year at a dramatically slower pace. Sales volume fell in all pricing segments in January, including the luxury home market, which saw its first decline in 12 months. However, rental activity was strong, and inventory levels continued expanding, providing consumers with more choices in the lead-up to the traditionally busy spring buying season.

According to the latest monthly report from the Houston Association of Realtors® (HAR), 4,100 single-family homes sold in January compared to 4,462 a year earlier. That represents an 8.1 percent decline – the third straight month of falling sales.

The single-family home median price (the figure at which half of the homes sold for more and half sold for less) edged up 1.4 percent to $222,000 and the average price rose 2.4 percent to $277,483. Those are the highest prices ever for a January.

Sales of all property types totaled 5,011, down 8.4 percent from January 2018. Total dollar volume for the month fell 4.4 percent to slightly more than $1.3 billion.

“January appears to have delivered a perfect economic storm of sorts, with some consumers focused on paying off holiday credit card bills, others concerned about the recent bump in mortgage rates and still others that may have felt the squeeze from the partial government shutdown,” said HAR Chair Shannon Cobb Evans with Heritage Texas Properties. “We are encouraged by the strong performance among rental properties, and I believe that as inventory levels continue to grow, more buyers will return to the market.”

Lease Property Update
Consumers that weren’t buying homes were renting properties at volumes not seen since November 2017. January single-family home rentals shot up 16.5 percent while rentals of townhomes and condominiums jumped 16.4 percent. The average rent for single-family homes edged up 0.4 percent to $1,755 and the average rent for townhomes and condominiums dipped 0.8 percent to $1,504.

January Monthly Market Comparison
January indicators for the Houston real estate market were mixed, with single-family home sales, total property sales and total dollar volume all down compared to January 2018. Pricing levels, however, rose to January highs. Month-end pending sales for single-family homes totaled 6,528, a 12.0 percent increase over last year. Total active listings, or the total number of available properties, climbed 16.8 percent to 38,872.

Single-family homes inventory recorded a 3.7-months supply in January, up from a 3.2-months supply a year earlier. For perspective, housing inventory across the U.S. also stands at a 3.7-months supply, according to the latest report from the National Association of Realtors® (NAR).

Single-Family Homes Update
Single-family home sales fell 8.1 percent in January with 4,100 units sold across the greater Houston area compared to 4,462 a year earlier. Prices reached the highest levels ever for a January. The median price increased 1.4 percent to $222,000. The average price rose 2.4 percent to $277,483.

Days on Market (DOM), or the number of days it took the average home to sell, narrowed from 68 to 65 days. Inventory registered a 3.7-months supply. That is up from 3.2 months a year earlier and matches the current national inventory level reported by NAR.

Broken out by housing segment, January sales performed as follows:
• $1 – $99,999: decreased 13.9 percent
• $100,000 – $149,999: decreased 24.7 percent
• $150,000 – $249,999: decreased 3.5 percent
• $250,000 – $499,999: decreased 7.4 percent
• $500,000 – $749,999: decreased 4.1 percent
• $750,000 and above: decreased 4.2 percent

HAR also breaks out the sales figures for existing single-family homes. Existing home sales totaled 3,391 in January, down 7.8 percent versus the same month last year. The average sales price increased 2.2 percent to $262,719 while the median sales price rose 2.6 percent to $210,000.

Townhouse/Condominium Update
Sales of townhomes and condominiums fell for a fifth consecutive month, dropping 10.5 percent versus January 2018, with 324 units sold compared to 362 one year prior. The average price declined 2.3 percent to $188,268 while the median price slid 2.8 percent to $154,250. Inventory grew from a 3.4-months supply to 4.1 months.

Houston Real Estate Highlights in January
• Single-family home sales fell 8.1 percent year-over-year, with 4,100 units sold, marking the third consecutive month of declining sales;
• Days on Market (DOM) for single-family homes lowered from 68 to 65 days;
• Total property sales tumbled 8.4 percent, with 5,011 units sold;
• Total dollar volume declined 4.4 percent to slightly more than $1.3 billion;
• The single-family home median price edged up 1.4 percent to $222,000, reaching a January high;
• The single-family home average price increased 2.4 percent to a January high of $277,483; 
• Single-family homes months of inventory was at a 3.7-months supply, up from 3.2 months last January and equal to the national inventory level;
• Townhome/condominium sales fell for a fifth straight month – down 10.5 percent, with the average price down 2.3 percent to $188,268 and the median price down 2.8 percent to $154,250;
• Lease properties saw their strongest performance since November 2017, as single-family home rentals climbed 16.5 percent with the average rent up 0.4 percent to $1,755;
• Volume of townhome/condominium leases surged 16.4 percent with the average rent down 0.8 percent to $1,504.