Houston’s economy received a brutal thrashing in August as crude oil dropped below $40 a barrel for the first time in six years. But even that didn’t stop home sales in Houston … a.k.a. the Energy Capital of the World.
The Houston Association of Realtors reports 7,454 single-family homes were sold last month – one of the best monthly totals ever for the city.
In fact, August home sales represented the eighth best month Houston has ever recorded, according to HAR, which has tracked sales activity for many decades. Last month was the strongest August ever.
Sales so far this year indicate that homes are selling at the nearly same pace as last year – and that’s an impressive pace, considering that 2014 was the best year ever for home sales.
What’s driving it?
For one thing, interest rates remain low: 30-year mortgages are available with less than a 4 percent interest rate. That makes buying a home affordable - and that can be appealing in a city where rents are skyrocketing.
And the city has gained over 64,000 jobs over the last 12 months, even though woes in the oil business have plagued the economy and things are expected to get worse.
And population has been increasing significantly with an estimated 1,000 people a week moving to Houston. This has driven home prices upward, tightened the housing supply and outstripped the ability of home builders to build houses fast enough.
“The problem with the residential market is we can’t develop enough lots. That’s the issue,” says Patrick Jankowski, regional economist with the Greater Houston Partnership. “We need to get more lots developed. If we could create a few more, it would lower lot prices, which would lower home prices.”
The Houston area’s population soared to 6.6 million last year, a gain of 156,000 people from 2013. Some of those numbers represented children being born, but there thousands of newcomers relocating to town.
“We’ve had 270,000 people move here in the last five years,” Jankowski says. “That’s why the roads are congested and that’s why housing prices are up.”
In August, the average price of a single-family home was $282,333, up about 3 percent from last August, reports HAR. The median price – the midpoint where half the homes sold for more and half for less – was $215,100, up about 5 percent from last August.
Houston’s rental market continued to climb.
The average rents rose about 4 percent from last year: to an average of $1,901 for a single-family home and $1,647 for a townhome or condo, reports HAR.
A total of 620 townhomes and condo units were sold last month, compared to 646 properties in August 2014.
The inventory of homes for sale was up slightly in August, but it was still far below the historical norm of years past.
The 7,454 homes sold in August represents a 0.6 percent gain over 7,407 sold in August 2014. However, both months were outstanding because monthly sales totals have broken the 7,000 barrier only a few of times in Houston’s real estate history.
“The Houston housing market has been robust in 2015, keeping pace with last year’s record-breaking numbers and August turned out to be flat, by and large,” says HAR Chair Nancy Furst with Berkshire Hathaway HomeServices Anderson Properties.
HAR indicates that there are still a lot of home under contract and sales activity should be strong again in September and October.
Home sales traditionally taper off in the fall and during the holiday times at the end of the year. The major spring and summer selling season is over. But when the final counts come in, there’s no doubt 2015 will go down as one of the best if not the best year ever for Houston home sales.
Ralph Bivins, founding editor of Realty News Report, is a past president of the National Association of Real Estate Editors.