Elevated interest rates and prices, low inventory, inflation and the holidays slow sales
Houston real estate was down for an eighth straight month in November as the market continued weathering strong economic headwinds that included inflation, elevated interest rates and home prices, and low inventory. Add Thanksgiving and the start of the holiday shopping season to the mix and a drop in sales was inevitable.
According to the Houston Association of Realtors’ (HAR) November 2022 Market Update, single-family home sales fell 30.4 percent, with 5,827 units sold compared to 8,374 in November 2021. That marks the steepest monthly sales decline of 2022. However, when compared to the last November before the pandemic – November of 2019 – sales were down 8.4 percent. On a year-to-date basis, the market trails 2021’s record-setting volume by 8.8 percent.
All housing segments experienced declines in November. By contrast, single-family home rentals had another solid gain, demonstrating that prospective buyers continue to shift to the rental market until economic conditions stabilize or improve. HAR will report on rental trends in the November 2022 Rental Home Update, to be released next Wednesday, December 21.
“Because Houston housing was hyper-energized at the beginning of the year, concern arose when interest rates increased and we began experiencing a consistent decline in sales volume,” said HAR Chair Jennifer Wauhob with Better Homes and Gardens Real Estate Gary Greene. “It’s important to maintain perspective by acknowledging that our market is battling the same forces as the rest of the country, between higher interest rates and prices, inflation and limited inventory. Fortunately, the Houston area has weathered the downturn better than many other markets.”
The average price of a single-family home rose 5.8 percent in November to $403,589 –well below the record high of $438,301 reached in May of this year. The median price increased 7.0 percent to $332,000, which is also below the highest median of all time, $354,000, which was achieved in June 2022.
November Monthly Market Comparison
November marked the eighth consecutive month of negative sales as the market endures a perfect storm of economic challenges, including inflation, elevated interest rates and pricing, limited inventory and the start of the holiday shopping season. Year-over-year single-family home sales fell 30.4 percent, but when compared to November 2019 – before the pandemic – sales were down just 8.4 percent despite the doubling of interest rates. On a year-to-date basis, sales are trailing last year’s record pace by 8.8 percent.
The monthly housing measurements for November offer a mixed bag of readings. In addition to the drop in single-family home sales, total property sales and total dollar volume fell; single-family pending sales declined by 28.3 percent. Active listings (the total number of available properties) is up 51.3 percent compared to last year, but remains below pre-pandemic levels.
Months of inventory continues to improve, growing to a 2.9-months supply in November. That is the highest level since July 2020 when it also was 2.9 months. Housing inventory nationally stands at a 3.3-months supply, according to the latest report from the National Association of Realtors (NAR). A 6.0-months supply is generally considered make up a “balanced market,” in which the buyer and seller are on equal footing.
Single-Family Homes Update
Single-family home sales fell 30.4 percent in November, with 5,827 units sold across the Greater Houston area compared to 8,374 a year earlier. That is the steepest one-month sales decline of 2022. The median price increased 7.0 percent to $332,000 while the average price rose 5.8 percent to $403,589. Both figures are well below record pricing levels attained earlier in the year.
For a pre-pandemic perspective, November sales are down 8.4 percent compared to November 2019, when a total of 6,359 single-family homes sold. The median price then was 27.4 percent lower, at $241,000, and the average price, at $297,070, was 26.4 percent lower. Sales are 7.3 percent behind where they were five years ago, in November 2017, when volume totaled 6,285. Back then, the median price was $225,000 and the average price was $282,936 – reflecting pricing jumps of 47.6 percent and 42.6 percent, respectively
Days on Market, or the actual time it took to sell a home, grew from 35 to 48 days. Months supply registered 2.9 months compared to 1.5 months a year earlier. That is the greatest months supply of homes since July 2020. The current national supply stands at 3.3 months, as reported by NAR.
Broken out by housing segment, November sales performed as follows:
- $1 – $99,999: decreased 13.9 percent
- $100,000 – $149,999: decreased 29.6 percent
- $150,000 – $249,999: decreased 44.6 percent
- $250,000 – $499,999: decreased 27.4 percent
- $500,000 – $999,999: decreased 19.0 percent
- $1M and above: decreased 23.7 percent
HAR also breaks out sales figures for existing single-family homes. Existing home sales totaled 4,214 in November, down 38.1 percent from the same month last year. The average sales price rose 4.3 percent to $397,178 while the median sales price increased 2.5 percent to $312,500. Those figures continue to be significantly below the pricing records that were set earlier this year.
For HAR’s Monthly Activity Snapshot (MAS) of the November 2022 trends, please click HERE to access a downloadable PDF file.
Townhouses and condominiums experienced their sixth consecutive monthly decline, dropping 36.2 percent year-over-year with 437 closed sales versus 685 a year earlier. That is the steepest monthly decline in sales volume for 2022. The average price declined 1.3 percent to $253,551 and the median price rose 3.8 percent to $218,000. Both figures are below the historic highs reached in April 2022. Inventory grew a 1.9-months supply to 2.1 months.
Houston Real Estate Highlights in November
- Single-family home sales fell 30.4 percent year-over-year, the eighth consecutive and steepest decline of 2022 as the market endures economic headwinds;
- All housing segments experienced negative sales in November.
- Days on Market (DOM) for single-family homes went from 35 to 48 days;
- Total property sales fell 30.2 percent with 7,171 units sold;
- Total dollar volume declined 28.2 percent to $2.7 billion;
- The single-family average price rose 5.8 percent to $403,589;
- The single-family median price increased 7.0 percent to $332,000;
- Single-family home months of inventory registered a 2.9-months supply, up from 1.9 months a year earlier. That is the greatest months inventory level since July of 2020;
- Townhome/condominium sales experienced their sixth straight monthly decline, falling 36.2 percent, with the average price down 1.3 percent to $253,551 and the median price up 3.8 percent to $218,000.