The Houston Association of Realtors’ latest report on the market showed a more than 18% drop in homes sales last month compared to March of 2022. It is the 12th consecutive month of declining sales after the market turned red-hot during the pandemic.
The new twist in this month's report is declining home prices, something that hasn't happened since the spring of 2020. The median price of a home in Houston dropped 3% in March, to $325,000, while the average price remained flat at nearly $409,000.
Another sign sellers may have to accept the reality of a declining market is how long it takes to sell a home. Last month, that number was 62 days, nearly double the time it took to sell a home a year ago, at 38 days.
"Sellers are now starting to feel that their homes are starting to stay on the market, they're hearing that and they're reading that, so their expectations of having multiple offers and their homes selling in a day are definitely starting to ease," HAR Chair Cathy Trevino said. "They're understanding the market now."
Inventory is also up in Houston, another factor that is putting downward pressure on home prices here. HAR says there was 2.7 months-worth of available inventory in March, more than double the inventory a year ago when bidding wars and multiple offers were the norm.
Those lower home prices haven't translated to lower appraisals yet. The Harris Central Appraisal District earlier this month said valuations are up again, an average of 16%. That comes after steep appraisal increases last year for about 95% of local homeowners.
"I don't think we're going to see home valuations on our tax appraisals actually come down until probably next year when you have a little bit more data," Trevino said.
Home prices in Houston have defied typical markets pressures until now. In most cases, a prolonged decline in sales would mean lower prices, but that has only started to happen recently. Even with a year of lower sales, prices were firm and went up in many cases.
There was some positive news for the market. HAR said compared to March of 2019, the last year before the pandemic, March home sales were up 13%, a sign of a slow return to market normalcy that was wiped-out by the buying frenzy during COVID lockdowns.
"It's really hard to compare last year's numbers to this year's numbers," Trevino said. "Those weren't necessarily sustainable. Those numbers were inflated because of everything that was going on."
There could be more positive news on the horizon. Mortgage rates have declined over the past few weeks and with more inventory and slightly lower prices, more potential homeowners could consider buying between now and the end of the year.
"We are hearing that the market is inclined to get better toward the latter part of the year, so that message is getting out to consumers and consumers are waiting to see if that would be a better time to purchase," Trevino said.
Real estate experts say after the hot-to-cold whiplash in the housing market over the past year, any good news is welcomed.
