Houston home sales fell more than 10 percent in November as the impact of falling oil prices and the softness in the local economy pinched the realty market.

The Houston Association of Realtors reports 4,595 single-family homes were sold in November, down from 5,135 sales in November of last year.

The November dip follows a weak October, indicating that the trend for exceptionally strong sales may have come to an end after a three-year run. Last year, was the best year ever for home sales in Houston and this year was strong also — until now.

Historically, home sales taper off at the end of the year as consumers focus on holidays, families and travel. But this is different. This decline runs deeper.

“It is slower than the typical November and December,” says Amy Bernstein of Bernstein Realty. “There are some very concerned buyers out there.”

Decline in oil prices

The decline in oil prices – dropping to a seven-year low of less than $38 a barrel today from a high of $107 in June 2014 – have caused layoffs and economic slowdown in Houston, also known as the “Energy Capital of the World.”

Houston housing market, which had been one of the strongest in the nation, will be hurt by falling oil prices, says Lawrence Yun, chief economist for the National Association of Realtors.

“Houston is more exposed to oil prices than Dallas,” Yun says. “Houston is taking a hit.”

Houston home prices are getting softer, Bernstein says, which may offer some opportunities to buyers who had been outbid during Houston’s supercharged market in recent years.

The average price of a home sold in November was $262,064, down 3.5 percent from $271,487 a year earlier, HAR reports. It was the first decline in Houston prices since February 2012.

On the plus side

Even with the fourth quarter swoon, Houston real estate is not headed for an outright catastrophe. Year-to-date home sales are running less than 2 percent behind the sales pace of 2014, which was the best year ever.

Houston overall economy has lost its status as one of the top job creators in the nation. Houston will gain 22,000 new jobs in 2016, not as many as the 100,000 jobs in 2014, but still a gain, not a job loss, says Patrick Jankowski, regional economist for the Greater Houston Partnership. Job creation fuels real estate markets.

Plus, Houston will be adding population next year, Jankowski says, and that’s another plus for real estate.

Rising mortgage rates

Looking ahead, a question mark facing housing is specter of rising mortgage rates. Many economists believe the Federal Reserve will move next week to raise interest rates and more rate hikes could be coming in 2016. Exceptionally low rates have been fueling home sales for seven years.

Last week, the 30-year mortgage rate was 3.93 percent, only slightly higher than the 3.89 percent reported a year ago, according to Freddie Mac.

“No one is expecting rates to move substantially in the months ahead given global economic weakness,” says Jonathan Smoke, chief economist for Realtor.com. Smoke expects mortgage rates to remain relatively low for at least a year, perhaps a lot longer.

Rising mortgage rates will have to go higher than 5 percent to have a real impact on home sales and it will be first-time home buyers who will be ones who get hurt the most when they do rise, according to the new First American Financial’s national survey of title agents.

First-time home buyers accounted for only 32 percent of home sales in the past year, the lowest number since 1987, according to the National Association of Realtors. Tight credit and restrictive lending policies have made it harder for younger people and first-time buyers to get home loans, the National Realtors Association says.

Ironically, the initial uptick in mortgage rates may actually provide a boost for home sales. When the fence-sitters or would-be home buyers who have been shopping for a home for a while see that rates are going up, they could be prompted to move quickly to buy a home.

That could make Houston realty start off 2016 with a bit of a lift – or at least offset the pain inflicted by the dismal oil prices.

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