Home prices achieve October highs with inventory dropping to an 11-year low
The number of homes on the market in Houston reached the lowest level in more than a decade in October, thanks to a surge in sales that also lifted prices to the highest levels ever for an October.
Single-family home sales skyrocketed 32.7 percent compared to October 2011, according to the latest monthly data prepared by the Houston Association of REALTORS® (HAR), and accounted for the 17th consecutive month of positive sales. Contracts closed on 5,379 homes, driving inventory down to 4.4 months, a level last seen in December 2001. All segments of the housing market saw gains in October, with the steepest among homes priced above $250,000.
“Home sales throughout Houston were incredibly strong in October and sent the supply of homes down to 4.4 months, which is the lowest level we’ve observed in 11 years,” said Wayne A. Stroman, HAR chairman and CEO of Stroman Realty. “Our active real estate market reflects the general health of the Houston economy, most notably the addition of close to 96,000 new jobs over the past year, according to the latest Texas Workforce Commission employment report. The inventory squeeze has definitely created fertile ground for homebuilders.”
The single-family home average price increased 8.3 percent year-over-year to $223,366, the highest level for an October in Houston. The median price—the figure at which half of the homes sold for more and half sold for less—jumped 8.7 percent to $163,000, also a record high for an October in Houston.
Foreclosure property sales reported in the Multiple Listing Service (MLS) declined 10.9 percent compared to October 2011. Foreclosures made up 15.5 percent of all property sales, the lowest one-month sales volume of the year and a likely reflection of the continued slowdown in the sales of homes priced below $80,000. The median price of October foreclosures rose 6.3 percent to $85,000.
October sales of all property types in Houston totaled 6,457, a staggering 35.1 percent increase over October 2011. Total dollar volume for properties sold during the month shot up 47.2 percent to $1.4 billion versus $945 million a year earlier.
October Monthly Market Comparison
October brought Houston’s overall housing market positive results when all sales categories are compared to October 2011. On a year-over-year basis, total property sales, total dollar volume and average and median pricing all rose.
Month-end pending sales for October totaled 3,854. That is up 24.6 percent from last year and signals the likelihood of further gains when November’s property sales data are totaled. Active listings, or the number of available properties, at the end of October declined 18.8 percent from October 2011 to 37,909.
Housing inventory in Houston first fell below a six-month supply in December 2011 and has remained below the five-month level for the past three months, dropping in October from 6.6 months a year earlier to 4.4 months. That is the lowest level observed locally since December 2001. For perspective, the national inventory of single-family homes is 5.9 months, according to the National Association of REALTORS® (NAR). A supply of less than six months is traditionally defined as a “seller’s market,” although buyers have been able to continue taking advantage of historically low mortgage interest rates.
Single-Family Homes Update
October sales of single-family homes in Houston totaled 5,379, up 32.7 percent from October 2011. That marks the 17th consecutive monthly increase and represents the second longest stretch of positive sales in Houston real estate history. The first was a 37-month sales run that ended in February 2007, prior to the recession.
Broken out by housing segment, October sales saw across-the-board gains:
- $1 – $79,999: increased 10.1 percent
- $80,000 – $149,999: increased 21.0 percent
- $150,000 – $249,999: increased 42.9 percent
- $250,000 – $499,999: increased 48.7 percent
- $500,000 – $1 million and above: increased 53.4 percent
The average price of a single-family home rose 8.3 percent from last year to $223,366, the highest level for an October in Houston. The highest and second highest average prices of all time were recorded in May and June of this year, respectively. At $163,000, the median sales price for single-family homes also achieved a record high for an October in Houston, up 8.7 percent year-over-year.
HAR also breaks out the sales performance of existing single-family homes throughout the Houston market. In October 2012, existing home sales totaled 4,576, a 35.3 percent leap from the same month last year. The average sales price rose 9.3 percent year-over-year to $210,100. The median sales price increased 9.8 percent to $151,000. Existing homes achieved all-time high prices in June of this year.
October sales of townhouses and condominiums soared 41.6 percent from one year earlier. A total of 490 units sold last month versus 346 properties in October 2011. The average price edged up 1.3 percent to $167,606 while the median price declined a fractional 0.8 percent to $134,000. Months inventory plunged 35.0 percent year-over-year to 5.0 months compared to 7.7 months in October 2011.
Lease Property Update
Houston’s lease property market had mixed results in October. Rentals of single-family homes rose 3.6 percent compared to October 2011, while year-over-year townhouse/condominium rentals declined 4.3 percent. The average rent among single-family lease homes and townhouse/condominiums climbed year-over-year but remained below the record levels reached over the summer. The October average rent for a single-family home was $1,562 while the average rent for a townhouse/condominium was $1,393.
Houston Real Estate Milestones in October
- Single-family home sales increased 32.7 percent year-over-year, accounting for the market’s 17th consecutive monthly increase.
- Total dollar volume shot up 47.2 percent, increasing from $945 million to $1.4 billion on a year-over-year basis;
- At $223,366, the single-family home average price reached the highest level for an October in Houston;
- At $163,000, the single-family home median price also reached an historic high for an October in Houston;
- 4.4 months inventory of single-family homes is the lowest level in nearly 11 years (December 2001) and is lower than the national average of 5.9 months;
- Sales of townhouses/condominiums rose 41.6 percent year-over-year;
- Single-family home rentals rose 3.6 percent compared to October 2011.