Housing

Houston home sales take another hit, down 30% last month

A perfect storm of market conditions has led to a rough 2022 for home sales in Houston and across the nation.

for sale sign
(AP Photo/Matt Rourke, File)
FILE – A “for sale” sign stands in front of a house in Pennsylvania, near Philadelphia, on June 8, 2018.

Houston home sales took their biggest hit of 2022 so far, falling nearly 30% in November because of a combination of factors, including high mortgage rates and not enough inventory.

A new Houston Association of Realtors report shows sales in every housing segment suffered in November, including a nearly 45% decrease in homes priced between $150,000 and $250,000. Homes priced between $250,000 and $500,000 fell 27% last month.

A perfect storm of market conditions has led to a rough 2022 for home sales in Houston and across the nation. Mortgage rates have more than doubled since last year and home prices are still relatively high, which has kept more potential homebuyers on the sidelines waiting for better deals.

It's the latest sign the Houston housing market is normalizing after last year's record sales.

"The number of sales just went so high, that when you now compare a 30% drop, but you remember you're comparing it to a year that was just completely abnormal, then it's not so scary," HAR Chair Jennifer Wauhob said.

Houston home sales are down almost 9% year-to-date in 2022 after last year's red-hot sales pace that began during the pandemic. When compared to home sales in November of 2019 before the start of the pandemic, last month's numbers were only off by about 8%, according to HAR numbers.

The city's housing inventory, another factor in last year's record market, has improved slightly, with 2.9 months of available housing for sale. Not enough homes on the market contributed to higher prices and bidding wars on available homes over the past few years. Real estate experts consider six months of inventory to be a balanced market.

While sales were down again last month, home prices were headed the other way. The average price of a home in Houston was $403,589, up almost 6% from November of 2021. The median price increased by 7% to $332,000.

Homes are also staying on the market longer, 48 days last month compared to 35 days in November of 2021. Many home sellers are also taking their homes off the market or lowering their asking price as the local market continues to slump.

"When you put that next to what their home was worth one or two years ago, they're still really happy with what they can get, even if it is a tad bit less than what their neighbor got three months ago," Wauhob said.

Despite the gloomy news, local experts say Houston is handling the downturn better than many other big cities that have seen sales, and home prices plummet over the past 8 months.

"Compared to major markets, we are still one of the more affordable cities to live in," Wauhob said. "I think that has really helped us, the fact that we didn't see the same price escalation as for example Austin. They had such an influx of people from high-priced states that really drove their home prices up and now they're really seeing their home prices come back down."

Sales of townhomes and condominiums in Houston also dropped significantly last month, down 36% compared to last November, the biggest drop of the year so far. Meanwhile, home rentals were up across the city again as more people opt to lease instead of buy in what has turned into a rocky market for both buyers and sellers.