What is the Latest in the Houston Housing Market?
The Houston housing market is starting to ease its way back toward more balanced conditions, but home prices have a long way to fall to be in the same ballpark as they were prior to the pandemic!
According to the Houston Association of Realtors (HAR) October 2022 Market Update, both the average and median home prices were still well above where they were during 2021's record-setting year and SIGNICANTLY ABOVE pre-pandemic home prices! The October 2022 market update also reported that the number of available homes on the market had a significant 43% boost!
However, the number of homes sold in October 2022 has declined to levels that we saw prior to the pandemic.
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Read on for a deep dive into the October 2022 Houston real estate market update, for a historical look at pre-pandemic home prices, and for our take on whether it is a good time to sell and/or buy.
Breaking Down the Numbers From the October 2022 Houston Market Update
Home prices continued to increase. Both the average and median home prices increased year-over-year; the median price rose 8.4% to $330,500 while the average price jumped up 7.2% to $403,712. On a month-over-month basis, both the average and median home prices declined slightly from September 2022's numbers, when the average home price was $414,776 and the median home price was $343,950.
March 2022 marked the first time that the average price of a single-family home broke $400,000 in the greater Houston area. Home prices reached their record high of $438,290 in May 2022.
The number of active homes on the market continued to increase. Inventory of homes, measured by how long it would take to sell all of the active homes on the market, increased to 2.8 months. Up from 1.8-months a year earlier and a slight increase from September 2022’s 2.7-months of inventory.
The number of available homes on the market in the greater Houston area is below the national average which currently stands at 3.2-months, as reported by the National Association of Realtors (NAR).
For the first time in 2022, all housing segments experienced a decline in the number of homes sold. Homes in the $500,000 to $1M range had the smallest decline falling by only 6.6%, followed by homes priced from $250,000 to $499,999, which fell 18.7%.
The number of homes sold in October 2022 continued its path toward pre-pandemic levels. The number of homes sold throughout the greater Houston area fell 22.8% with 6,641 single-family homes sold. The drop in the number of homes sold marks the seventh consecutive monthly decline.
From a pre-pandemic perspective, October home sales are down 7.6% compared to three years ago, when a total of 7,187 single-family homes were sold. At that time, the median price was 37.7% lower, at $240,000, and the average price was 35.4% lower, at $298,158.
What were the pre-pandemic statistics?
You’ve likely heard numerous market update references to “pre-pandemic numbers", but what exactly were the Houston area real estate statistics before the historic pandemic fueled the surge in home sales and unprecedented rise in home values?
Below is a look at key statistics comparing October 2019 (pre-pandemic) to October 2022. The stats below are for single-family homes in the greater Houston area.
Here is a breakdown of the statistics:
- The average price of a single-family home in the Houston area prior to the pandemic was $298,354, a staggering $105,358 lower than the current average sales price.
- The pre-pandemic median sales price was $90,600 less than the current median of $330,500.
- The current year-to-date dollar volume is nearly $650M ahead of 2019’s pre-pandemic pace.
- The number of homes sold in October 2022 is 8.16% (using the calculation HAR reported at that time) behind the pre-pandemic number of single-family homes sold.
At the time, what did the headlines say about the Houston real estate market prior to the pandemic? The market update headline in October 2019 was “Buyers maintain demand for Houston Housing in October. Home sales rise for a fourth straight month,” even though home prices only rose 1.3% from the previous year! In just three years, the average Houston area home price has increased by $105,358, a 35.31% gain!
HAR’s 2019 press release stated that “On a year-to-date basis, home sales are 4.2 percent ahead of 2018’s record volume, making it ever more likely that 2019 will establish a new record for local real estate. Single-family home prices set new October highs. The median increased 2.1 percent to $239,900 while the average price rose 1.3 percent to $298,354.”
While the Houston area real estate market is starting to adjust, the Bayou City has a long way to fall in order to make up the difference in the historic surge we’ve had in the last three years.
What does this mean for Houston area buyers and sellers?
Is now a good time to sell? In most scenarios, YES! We are still living in a seller’s market and home prices are still well ahead of 2021’s record-setting numbers. The housing inventory reached a 2.8-months supply last month, which is the highest number of available homes on the market that the Houston area has seen since July 2020. However, that is still 30% below the 4-months of inventory that our city had prior to the pandemic.
Is now a good time to buy? It depends! Buyers currently have more opportunities as inventory continues to grow! We are also seeing fewer multiple offer situations giving buyers wiggle room to negotiate.
The aggressive nature of the multiple offer situations (waiving all contingencies, paying $100K over asking, and giving up your firstborn child) has also significantly declined, making the upfront cost of buying a home go down considerably. On the flip side, interest rates are still increasing.
Whether you are a buyer or a seller, it’s crucial to weigh the pros and cons with an experienced Realtor. Preferably a seasoned one that has experienced several highs and lows in the Houston real estate market. Don't hesitate to reach out to discuss your homebuying or selling goals in detail!
The Chairman of Texas REALTORS® summed up the market perfectly in the recently released 2022 Q3 Texas Quarterly Housing Report: