Houston market update for July 2022 is another month of mixed readings
The frenetic pace of home sales that have dominated the Houston housing market throughout most of the pandemic is starting to tap the breaks when it comes to the number of homes sold in July 2022. However, the average sales price is up a whopping 9.9% on a year-over-year basis.
According to the Houston Association of Realtors (HAR) most recent market update, the average sales price in July 2022 was $426,494, marking the third highest average sales price EVER in the Bayou City.
While it is still a sellers’ market, buyers are starting to regain some negotiating power. Let’s take a closer look at the insights from HAR’s July 2022 market update and dissect what it means for buyers and sellers.
Six notable insights from July 2022's Houston market update
Home prices are still at RECORD HIGHS. Both the average and median sales prices are the third highest that they have EVER been in the history of Houston real estate. Strong sales among higher-end homes pushed the median price up 12.7% to $348,740 while the average sales price is up 9.9% to $426,494 year-over-year.
To put this into perspective, the FIRST time the average price for a single-family home in Houston broke the $400,000 mark was in March 2022! By the end of 2021, the Houston real estate market broke six all-time records officially solidifying its place in the record books for the hottest market this city has EVER seen. At that time, the average sales price was $376,075. Since then, the average sales price has increased by $50,419, a 13.4% gain!
The pre-pandemic (February 2020) average price of a single-family home in the greater Houston area was $301,648. That is $124,846 (41.39%) less than the current real estate market.
It kind of blows your mind when you really think about that, right?!
The number of available homes on the market is at its highest level in two years. Inventory of homes, measured by how long it would take to sell everything on the market, jumped up 30% in July reaching a 2.5-months supply, up from 1.7 months a year earlier, and a 25% boost from June 2022’s supply of 2-months.
This marks the highest number of available homes on the market since August 2020 when it was at 2.6 months. For context, pre-pandemic inventory was at a 3.5-months supply.
A 6-months supply is generally considered a “balanced market”, in which neither buyer nor the seller has the upper hand.
Less homes are selling above list price. After surpassing the 100% mark for the last three months in a row, the average ‘close price to list price’ ratio fell to 98.9% in July. Meaning, that not all buyers paid above the list price in July 2022.
For a frame of reference, the first time the ‘close to list price ratio’ broke the 100% mark was in April 2022.
The $500K to $1M price range is still booming. The only housing segment that did not experience negative sales in July was the $500,000 to $1 million segment, which leapt up a staggering 40.6% on a year-over-year basis.
The average days on market (the amount of time a home is active on the market) remained the same at 26 days.
The number of single-family homes sold in July took a hit. The number of single-family homes sold in the greater Houston area in July 2022 was 17.1% below the pandemic-induced peak of 10,102 in July 2021 and much closer to the pre-pandemic level of 8,921 in July 2019.
The drop in the number of homes sold marks the fourth consecutive monthly decline and moved the needle 1.3% behind 2021’s record-setting pace.
Below is a look at single-family home sales in the greater Houston area from July 2014 to July 2022.
The increased number of homes on the market and the decline in the number of homes sold in July 2022, did not move the needle in terms of a decline in home prices. Instead, home prices increased on a year-over-year basis and are currently at the third highest they have ever been in our city’s history!
Has the Houston real estate market shifted? Very little. Will the greater Houston real estate market continue to shift? Most likely it will.
The frenzy in the market and historical rise in home values is unsustainable, and frankly, this slight shift is needed for both buyers and sellers that are also hoping to buy in this same real estate market.
What does this mean for sellers?
The number one question most sellers ask is “what can I sell my house for in today’s real estate market?” According to July 2022’s sales price metrics, you still have time to advantage of record-high home prices and still a relatively low number of available homes on the market!
Nearly half (48.1%) of mortgaged homes were considered equity-rich in the second quarter of 2022, according to the recent 2022 U.S. Home Equity & Underwater Report from ATTOM
. This is up from 44.9% at the end of the first quarter of 2022 and up from 34.4% in the second quarter of 2021.
Today's real estate market is actually prime for sellers that are also planning to buy a home! The number one reason that homeowners who were on the fence about selling in the past few years did not list their homes was the fear that they would have nowhere to go. The slight market shift provides a higher number of available homes and gives buyers a little more negotiating power. With home prices still at record highs, it is a no-brainer for sellers in this situation to act now!
There is a solid chance that we will continue to see slight shifts in the Houston real estate market. If you are considering selling your home, I would act now before your window continues to narrow!
What does this mean for buyers?
Buyers are already starting to view this slight shift as a second-chance opportunity after two years of being outbid over, and over, and over again.
The inventory boost gives buyers more options. Which is a welcome relief to buyers that felt like they were settling due to the lack of available homes on the market.
Throughout the heightened pandemic-induced market, the vast majority of homes had multiple offers within the first couple of days on the market forcing buyers to act fast. This slight market shift should allow for the crucial time needed for proper due diligence to make more informed decisions.
Will there still be multiple offer situations? Yes. However, buyers will be competing with far fewer offers. This means that buyers shouldn't have to pay 20%+ over the list price and won't need to waive as many contingencies in order to even be considered.
to read the complete HAR market update for July 2022.