The Houston housing market shrugged off the frightening free-fall in oil prices and racked up a very strong January.
The Houston Association of Realtors reports 4,032 single-family homes were sold in January, up 6 percent from January of last year.
The bright news for January sales comes as Houston energy companies have laid off thousands of employees and oil rigs are being mothballed. A sharp drop in oil prices — West Texas crude has fallen from $100 a barrel last summer to less than $50 a barrel today — has darkened the outlook for the Houston economy.
“There’s a lot of speculation about oil prices, but the nice homes that come on the market continue to sell."
But so far this year, the Houston housing market has failed to comply with the negative forecasts.
“There’s a lot of speculation about oil prices, but the nice homes that come on the market continue to sell,” says Houston Realtor Natalia Arjona of Re/Max The Woodlands and Spring. “Some people panic a little bit, but the demand continues to grow.”
Arjona says a few homes are even getting multiple offers when they hit the market, although that’s not as common as when home sales were on fire last summer.
“When oil prices drop, the Houston economy is OK. When oil prices are high, the economy is booming,” Arjona says.
Home prices hit record highs for a January in Houston. The single-family average price increased 7 percent from last year to $259,969 and the median price climbed almost 7 percent to $190,000, the Realtors association reported.
January is typically a slow month because the holiday season constricts the home market at year-end. There aren’t many sellers putting their homes up for sale the week before Christmas and there aren’t many buyers, either. That makes January pretty dead. It takes a while for home sales to rekindle.
But January of 2015, despite the decline in the energy industry, turned out to be the second-best January on record for Houston, falling behind only January of 2007, according to the Realtors association.
“January was a strong month overall for the Houston housing market, but we still expect to see sales cool as a result of lower oil prices and the limited supply of homes,” says HAR Chair Nancy Furst of Berkshire Hathaway HomeServices Anderson Properties. “We’ve already started to see declining townhome and condominium sales.
"Coming off a record year, this normalization should give homebuilders an opportunity to create new inventory, with existing homes entering the market in the spring and summer months, which is traditionally the most popular time for owners to sell.”
Future Less Certain
The Houston Association of Realtors, which includes 29,000 Realtors working in Houston and the surrounding area, has projected a 10 to 12 percent decline in home sales in 2015. The forecast was developed by former HAR Chairman Ted C. Jones, the chief economist of Stewart Title.
So far this year, the Houston housing market has failed to comply with the negative forecasts.
Jones says the Houston economy will slip back in 2015, after being a national leader in job growth in 2014 when Houston gained 120,000 new jobs.
“Right now, my forecast is we will drop down from 120,000 jobs to 65,000 in 2015,” Jones says.
Home builders ran behind in constructing new houses to keep up with the demand as the city’s population grew in the recent energy boom. That made the inventory of single-family homes shrink to record lows. Houston has only a 2.6 months supply of homes for sale, which is near a record low. The National Association of Realtors reports a 4.4-months supply of homes for sale nationally.
Houston is coming off its strongest year ever with 73,573 home sales in 2014. With the softening local economy, many realty experts are looking for slower sales this year.
But so far — based on these January numbers — the slowdown has not yet occurred.
Ralph Bivins, former president of the National Association of Real Estate Editors, is founding editor of Realty News Report.