Hot Houston Market Cooling Off??? Think Again!

Houston's hot housing market is finally cooling off low home inventory and local economic concerns about low oil prices.

Single-family home sales dropped 5.8 percent year over year in February, the first time that metric has seen a decline in the past six months, according to the Houston Association of Realtors' latest monthly report.

In fact, several market indicators entered negative territory in February. Sales of all property types also decreased 4.7 percent, and total dollar volume was down 1.7 percent. Notably, sales of homes priced at $500,000 and above, which had been seeing year-over-year increases most months, declined 1.4 percent in February.

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However, both the average price and the median price of single-family homes reached record highs for a February in Houston. The average price increased 4.5 percent year over year to $259,293, and the median price jumped 7.9 percent to $199,400.

Inventory remained low, at 2.7 months, but that's up slightly from the 2.6-month supply recorded in January as well as in February 2014. For comparison, national inventory was 4.7 months in February. Months of inventory is an estimate of how long it would take to sell off all active listings based on the past 12 months of sales and is an indicator of housing supply.

The past two years were record-breakers for Houston's housing market, but a slowdown was expected due to low housing inventory, low oil prices and job cuts announced at several energy companies in recent weeks.

"We are witnessing the start of exactly what economists predicted would create a more 'normalized' Houston real estate market: declining sales volume, increasing prices and improvement in housing inventory levels," HAR Chair Nancy Furst, with Berkshire Hathaway HomeServices Anderson Properties, said in a statement. "While some local energy jobs have gone away, the Texas Workforce Commission just declared 2014 one of the best years for job creation in Houston, with almost 105,000 jobs added and continued hiring expected this year, albeit at lower levels. No one knows for sure where oil prices will go in the months ahead, but the diversity of Houston's economy should help our housing market hold its own during this transition."

Works Cited: https://www.bizjournals.com/houston/news/2015/03/11/houstons-hot-housing-market-sees-first-sales.html