Houston home sales showed no signs of a slowdown as August sales were up over 16 percent over the same month last year. The 7,504 single-family homes sold last month was the fourth month in a row sales have topped 7,000 — a pace not seen since 2007, according to the Houston Association of Realtors.
“This has definitely been a summer sales season unlike any we have seen before,” says HAR Chairman Danny Frank with Prudential Anderson Properties. “It’s difficult to say exactly when Houston’s boiling real estate market will begin to cool down.”
"Nobody is complaining about the rates. People are happy to get their deals done."
The inventory of homes for sale has tightened to a 3.3-month supply, down from a 3.4-month supply in July. A year ago, the inventory stood at 4.9 months.
The tight supply of homes for sale pushes prices higher and puts pressure on buyers who may be having a hard time finding a home in their price range and preferred part of town.
Mortgage interest rates have risen significantly since spring. In late May, the average mortgage interest rate was about 3.5 percent, but that has jumped to 4.5 percent today, according to the Freddie Mac survey of 30-year mortgage rates.
Houston Realtor Shad Bogany, chairman of the Texas Association of Realtors, says the higher mortgage rates have not dampened the hot market.
“No, not at all, really. Nobody is complaining about the rates. People are happy to get their deals done,” Bogany says.
The main challenges to the market are appraisals and mortgage availability, says Bogany. Mortgage lenders continue to have overly restrictive requirements on buyers who are trying to get approved for a mortgage, he says. And appraisers often fail to adjust to the current market with rapidly rising home values, says Bogany, who hosts a real estate call-in radio program on KWWJ 1360 AM.
Home prices have been rising sharply. The single-family median price in Houston rose 13 percent in August to $186,200, up from August of 2012, when the median was $165,000, the Realtors association reports. It was the highest median home price ever for an August in Houston.
The high-end of the local housing market registered remarkable gains. For homes priced at $500,000 and up, sales were up 51 percent in August, compared to August of last year.
The rental market was also strong. The August average rental rate was $1,748 in for a single-family home in Houston, a record high for an August.
Houston’s real estate market is one of the strongest in the nation. Major expansion in the energy industry is helping the city’s economy generate some 100,000 new jobs over the last year. That expansion, with the large number of energy company employees being transferred to Houston, has injected a lot of momentum into the housing market.
Home sales traditionally taper off as the holiday season approaches, so milder sales activity is expected this fall.