Houston's Bulletproof

What slowdown? Home sales keep rising even though oil prices fall: New record set in Houston

What slowdown? Houston home sales keep rising even as oil prices fall

Houston, Centennial Showcase Home, June 2015
The number of sales in the Houston area broke a record in July. Courtesy photo

July was the strongest month ever for home sales in Houston as the local housing market defied predictions of a slowdown and fallout from the declining energy industry.

A total of 8,147 single family homes were sold in July, the first time more than 8,000 homes have been sold in a single month, the Houston Association of Realtors reports. In fact, home sales have cracked the 7,000-sales mark only a few times over the years.

Many had been expecting a slowdown in Houston home sales after oil prices fell from over $100 a barrel last summer to under $50 a barrel today, prompting energy companies to layoff thousands of workers.

But economic conditions in Texas have not declined enough to flatten home sales and mortgage interest rates remain low – around 4 percent.

“People are taking advantage of super low interest rates right now,” says Ted C. Jones, chief economist of Houston’s Stewart Title. “It’s all about economics.”

Although energy companies have laid off people, other businesses have been hiring people and Houston remains with a net gain in jobs, Jones says.

Rising rents are also driving apartment dwellers into buying a home, Jones says, because today’s higher rents make purchasing a house an attractive proposition.

 Rising rents are also driving apartment dwellers into buying a home, Jones says, because today’s higher rents make purchasing a house an attractive proposition. 

“The rental market is extremely expensive,” says Realtor Shad Bogany of Better Homes & Gardens Gary Greene.

Bogany says even people who have lost their energy company jobs resist the instinct to sell their house and relocate to an apartment because when they put a pencil to it, owning a home is less expensive than renting.

Home sales have been on a roll in Houston. After a record setting year in 2014, home sales are running slight ahead of last year’s fiery pace.

So far this year 43,559 single-family homes have been sold in the Houston area, up slightly from 43,482 sales at this point in 2014.

Single-family home sales in July represented almost a 7 percent gain over sales in July of last year, HAR reports.

“The Houston housing market has been blessed with another solid month of gains,” says HAR Chair Nancy Furst with Berkshire Hathaway HomeServices Anderson Properties.

The previous record for home sales in a single month was set earlier this summer when 7,669 homes were sold in June 2015. Sales of townhouses and condominiums were up about 7 percent in July, compared to a year ago.

Home prices continue to rise. The average price of a single-family home sold in July was $293,790, up over 6 percent from last year, HAR reports. The inventory of homes for sale remains tight and as Houston continues to grow, prices are pushed upward.

Houston’s residential markets seem bulletproof, even though oil — a key component of the local economy — suffers. This week, oil prices hit their lowest point in six years – about $43 a barrel, down from $107 last summer.

Layoffs have occurred at local oil companies and more cutbacks are on the way. But Houston is proving it’s more than just an oil town. Other parts of the economy are still churning.

Houston’s home sales in 2015 are keeping pace with last year’s blistering record-setting pace.

And when the dust settles, 2015 could end up being the best year ever for home sales in Houston – the Energy Capital of the World. Who would’ve thunk it?

Ralph Bivins, editor of Realty News Report, is a past president of the National Association of Real Estate Editors