Houston home sales set records as average price nears $400K

Single-family home sales jumped 22.9 percent to 7,372 units sold from 5,997 in February of 2021, when sales were stalled by a freeze and subsequent power outages that shut down much of the city. The sales volume, though, was up 23.3 from Feb. 2020, one of the last normal months before the pandemic began to shake up the real estate market.

The supply of homes on the market sank to a low of 1.3 months in February, matching the historic low in May of 2021. Inventory by months represents how long it would take to sell the homes on the market at the current pace. Six months is considered a balanced market where neither the buyer or seller has the upper hand.

“Last year’s freeze may have distorted the February sales figures, but the fact remains that home sales throughout Houston continue to trend upward despite the challenges posed by limited inventory, record-setting pricing and rising interest rates,” HAR Chair Jennifer Wauhob with Better Homes and Gardens Real Estate Gary Greene said in the report. “We are watching closely to see how the local housing market may be affected this month by surging oil prices and some of the other economic fallout of the Russia-Ukraine conflict.”

On HoustonChronicle.com: Houston home prices start 2022 with double-digit gains

The rise in oil prices — which have topped $120 a barrel before retreating below $110 Wednesday — could bring more buyers in the market by boosting the region’s all-important energy industry — depending on how long the prices are sustained.

“In the past, when oil prices were high for a longer period of time, there were more people being transferred in and the oil companies hired more people,” said Steve Hardcastle, a broker with Re/Max Signature. “They’re a lot more cautious now.”

Hardcastle says home prices have gone up by 20 percent in last two years in some neighborhoods where he sells in Cypress, Katy and the Energy Corridor.

“It’s a real challenge for a buyer to find a house and be able to compete with all the other buyers that are looking at the same house,” he said. “But sellers are doing great.”

Sales volumes for homes priced below $250,000 fell due to a lack of supply on the market, according to the Houston Association of Realtors.

Sales of homes priced between $250,000 and $500,000 surged 80 percent in February from a year earlier. Homes from $500,000 to $1 million were the second most active segment, with the number of sales climbing 72.3 percent. The number of sales of luxury homes priced at $1 million and above went up by 33.5 percent.

The inventory was tightest for homes in the $200,000 to $249,999 range, with less than a month’s supply, according to the realty association.

Homes, meanwhile, are spending less time on the market. In February, the average period on the market fell by a week to 41 days in February.

Ted C. Jones, chief economist at Stewart Title, says the sharp rise in prices is driven by strong demand and low interest rates. With the rate of 30-year fixed home loan averaging 3.76 percent, the principal and interest on a $229,000 loan are about $1,000 a month, making buying a good choice if you plan to stay in the house at least three years, Jones said.

“The largest single store of wealth for the middle class is their home,” Jones said. “If you don’t buy that home then you don’t get that equity.”