Steady consumer demand drives prices to record highs and inventory back to its historic low
HOUSTON — (March 9, 2022) — The Houston real estate market completed its second month of the new year in positive territory, despite soaring prices and evaporating inventory. Home sales scored double-digit gains in February, but part of the strong showing was because the statistics compared to last February, when that deadly Texas freeze halted real estate activity for days, and in some cases, even longer. Undistorted by the weather factor were the continued squeeze on inventory, which returned to its all-time low, and pricing, which due to limited supply and ongoing consumer demand, soared to record highs.
According to the Houston Association of Realtors’ (HAR) February 2022 Market Update, single-family home sales jumped 22.9 percent with 7,372 units sold compared to 5,997 in February of 2021. Compared to the last “normal” February – in 2020 – sales volume was up 23.3 percent. With fewer housing options available for purchase, consumers placed heavy demand on single-family rental homes in February.
Homes priced between $250,000 and $500,000 led the way in sales for the month, registering an 80.1 percent year-over-year gain. The $500,000 to $1 million housing segment came in second place, surging 72.3 percent. That was followed by the luxury market – consisting of homes priced at $1 million and above – which rose 33.5 percent.
For months now, the lack of available homes below $250,000 has forced consumers to shop for homes at higher price points. In February, this tight sellers’ market pushed prices beyond the records set in 2021 to the highest levels of all time. The average price of a single-family home rose 13.4 percent to $395,871 while the median price increased 19.3 percent to $328,000.
Sales of all property types jumped 25.6 percent year-over-year, totaling 9,299, and total dollar volume for February soared 43.5 percent to $3.5 billion.
“Last year’s freeze may have distorted the February sales figures, but the fact remains that home sales throughout Houston continue to trend upward despite the challenges posed by limited inventory, record-setting pricing and rising interest rates,” said HAR Chair Jennifer Wauhob with Better Homes and Gardens Real Estate Gary Greene. “We are watching closely to see how the local housing market may be affected this month by surging oil prices and some of the other economic fallout of the Russia-Ukraine conflict.”
Lease Property Update
Houston’s lease market had a generally strong February, continuing to benefit from consumers that have postponed homebuying plans until the market provides a bigger and more affordable supply of housing. Single-family rental homes jumped 23.8 percent year-over-year. However, leases of townhomes and condominiums declined 1.0 percent. The average single-family rent rose 6.5 percent to $2,052 while the average rent for townhomes and condominiums increased 7.9 percent to $1,767.
February Monthly Market Comparison
February was a strong month for Houston real estate, despite year-over-year readings that were distorted by the interruption to real estate caused by the Arctic blast last February. Single-family home sales rose 22.9 percent year-over-year. When compared to the last “normal” February, in 2020, sales were up 23.3 percent. On a year-to-date basis, sales are running 15.4 percent ahead of 2021’s record pace.
Most of the other monthly measurements were also positive. Pending sales jumped 23.6 percent. However, total active listings — or the total number of available properties — fell 10.7 percent as a result of the steady homebuying that never let up as Houston’s record-setting real estate year of 2021 ended and 2022 began.
Single-family homes inventory slid to a 1.3-months supply versus 1.5 months last February. That matches the historic low that inventory maintained from March through May of 2021. Over the past year, its highest level was a 1.8-months supply in August 2021. Housing inventory nationally is at a 1.6-months supply, according to the latest report from the National Association of REALTORS (NAR).
Single-Family Homes Update
Single-family home sales shot up 22.9 percent in February with 7,372 units sold throughout the greater Houston area compared to 5,997 a year earlier. Part of that sizeable gain is attributed to an interruption in real estate business last February resulting from the deadly Texas freeze. HAR compared sales volume to the last “normal” February, in 2020, and that reflects an increase of 23.3 percent.
Strong sales volume among higher-end homes pushed up pricing to historic highs. The median price climbed 19.3 percent to $328,000 while the average price rose 13.4 percent to $395,871. These surpassed the last record average price of $393,295 set in June of 2021 and the last record median price of $317,990 set in December of 2021.
Days on Market, or the actual time it took to sell a home, fell from 48 to 41 days. Inventory registered a 1.3-months supply compared to 1.5 months a year earlier. That matches Houston’s lowest inventory level of all time – first reached last spring. The current national inventory figure stands at 1.6 months, as reported by NAR.
Broken out by housing segment, February sales performed as follows:
$1 - $99,999: decreased 24.0 percent
$100,000 - $149,999: decreased 53.5 percent
$150,000 - $249,999: decreased 44.1 percent
$250,000 - $499,999: increased 80.1 percent
$500,000 - $999,999: increased 72.3 percent
$1M and above: increased 33.5 percent
HAR also breaks out sales figures for existing single-family homes. Existing home sales totaled 5,765 in February. That was up 23.4 percent from the same month last year. Because that figure was likely skewed by the freeze effect last year, a comparison to February 2020 shows an increase of 24.0 percent. The average sales price rose 12.1 percent to $391,180 while the median sales price climbed 18.1 percent to $319,000. The average price is the second highest of all time while the median establishes a new record high.
Houston Real Estate Highlights in February
Single-family home sales rose 22.9 percent year-over-year, a figure likely skewed as a result of the freeze last year that interrupted real estate transactions for days on end. When compared to the last “normal” February, in 2020, sales volume increased 23.3 percent;
- Days on Market (DOM) for single-family homes dropped from 48 to 41
- Total property sales rose 25.6 percent with 9,299 units sold
- Total dollar volume increased 43.5 percent to $3.5 billion
- The single-family average price rose 13.4 percent to $395,871, the highest of all time
- The single-family median price increased 19.3 percent to $328,000 – also a record
- Single-family home months of inventory registered a 1.3-months supply, down from 1.5 months year-over-year and below the national inventory of 1.6 months
- Townhome/condominium sales jumped 35.9 percent with the average price up 22.4 percent to $266,366 and the median price up 26.8 percent to $225,00 – both record highs
- Single-family home rentals rose 23.8 percent with the average rent up 6.5 percent to $2,052
- Townhome/condominium leases decreased 1.0 percent with the average rent up 7.9 percent to $1,767
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