In February, the Houston real estate market continued to come down to a more normal, pre-pandemic balance. Unlike some other markets across the country, Houston's real estate market has seen some positive signs for both buyers and sellers as we approach the Spring. For Buyers, home prices have leveled off across the whole market and most buyers will find more options on the market than they would have over the past couple of years. For Sellers, homes continue to sell relatively quickly by historic standards and inventory levels should support moderate price growth in the coming months, especially in the most sought-after Inner Loop and near-town neighborhoods.
According to the latest report from the Houston Association of Realtors (HAR), 5,723 units sold in February compared to 7,430 in February 2022. That marks the 11th consecutive monthly decline. However, when compared to the last February before the pandemic sales were up 7.2 percent.
For the first time since the Spring of 2020, home prices have fallen slightly year-over-year. The average price dropped 2.4 percent to $385,103 and the median price declined 1.6 percent to $320,000. These prices are just above home prices and January. Homebuyers should expect home prices to still be up in many sought-after neighborhoods around time.
According to HAR, total active listings, or the total number of available properties, increased 69.2 percent to 33,109. February sales of all property types totaled 6,981 down 25.3 percent compared to February 2022. As a result, the absorption rate for February 2023 was 21 percent. Although still strong by historic standards, this is down considerably from the crazy absorption numbers we saw during the pandemic. At the end of the day, we have entered a much more normal balance than we have grown accustomed to over the past couple of years.
The Days on Market (DOM), or the number of days it took the average home to sell, rose to 63 days in February, up from the 41 days on market we saw last February.
Inventory levels rose again in February, reaching a 2.6-months supply. That is the highest level since July 2020. Housing inventory nationally stands at a 2.9-months supply, according to the latest report from the National Association of Realtors (NAR). A 6.0-month supply is generally considered a “balanced market,” in which neither the buyer nor the seller has the upper hand. By historic standards, we are still in a Seller's market, but the market has definitely shifted in the buyer's favor in recent months.
Mortgage rates have bounced around in recent weeks, which has left many buyers guessing and hesitant. In the coming weeks, the state of the local real estate market will be very dependent on whether rates fall or not. It will also be dependent on the economic outlook nationally. If rates stabilize or fall and national economic news is positive, we could see an increase in homebuyer activity, which could have a positive impact on home prices in most Houston neighborhoods.
Whether the market is booming or slow, be prepared. Make sure you have the information you need to make an informed decision on when to start house hunting or listing your home. Contacting a Norhill Realtor is a good place to start. Get connected with one of our experienced agents who can talk you through the market in the neighborhoods you care about as well as discuss the timing for either selling or buying.