Houston single-family home sales hit an all-time high in July as 7,704 homes were sold.
Houston’s phenomenal job growth and low mortgage rates, have been driving home sales to new highs. Local home sales have been on a winning streak that stretches back 26 months, according to the Houston Association of Realtors.
“July was another off-the-chart month for home sales, and it really comes as no surprise given the additional job growth and other strong economic conditions that continue to draw more people to the greater Houston area,” said HAR Chairman Danny Frank with Prudential Anderson Properties. “Fortunately we are seeing more homes listed for sale, which should help bring the supply-and-demand scale into healthier balance as we enter the fall months when sales activity typically begins to slow down.”
Last month, home prices achieved the highest levels ever recorded in a July in Houston.
The home sales total in July represented a 23 percent increase over the sales reported by HAR in July of 2012.
The market is not expected to keep up this sizzling pace for the rest of 2013. For one thing, sales always taper off in fall when kids go back to school and the year-end holidays approach. The spring and summer are always the strongest for home selling; winter is the weakest. This pattern goes back for many decades.
Another possible obstacle is mortgage rates. Over the last year or so, mortgage interest rates had been below 4 percent – the lowest rates in 50 or 60 years. In late June, mortgage rates jumped up sharply. Rates are still low compared to typical rates over the last 30 years, but an every increase prevents some consumers from being able to afford a home.
“Currently, mortgage rates on 30-year fixed mortgages are 1.1 percentage points above their all-time low set on November 21, 2012, which translates into $125 more per month in mortgage payments on a $200,000 loan," says Frank Nothaft, chief economist for Freddie Mac.
Freddie Mac reported the average 30-year fixed rate mortgage was 4.4 percent for the week ending August 15. But the market hasn’t really had enough time to reflect the full impact of the higher mortgage rates.
In 2013, Houston has been experiencing a home-buying frenzy in some markets with sellers getting multiple offers. Buyers have had difficulty finding houses.
The HAR reports that the inventory of homes for sale is getting slightly larger. The market had a 3.4-month supply of homes for sale in July, up from a 3.3-month supply in June. But the supply is still very tight. A year ago, the Houston market had a 5.3-month supply. If the trend for increased supply continues, the buying frenzy should moderate somewhat.
Last month, home prices achieved the highest levels ever recorded in a July in Houston. The single-family median price rose 10.5 percent from last year to $187,760 and the average price climbed 13.6 percent year-over-year to $260,968. The average price is the second highest of all time, with the record high of $266,351 reached in June 2013.
Houston’s housing market is being fueled by the strong job growth. The area has added almost 98,000 new jobs over the last 12 months. The new jobs, many of them a by-product of fracking energy exploration businesses, provide a high need for homes.