SterlingResidential.com | Buying & Selling Residential Properties in Texas | Houses for Rent Houston Area | Humble Atascocita Kingwood & Spring Texas Realtors | Sterling Residential®, Realtors® | Real Estate Broker: July 2007: sales post modest rebound from June's decline; will inventory plateau at 6.2 months?

Houston Market Conditions Summary: sales up a modest 2%; inventory up almost 12% over 2006, but matches June’s 6.2 months; median price declines less than 1% from 2006

HOUSTON — (August 23, 2007) July’s single-family home sales posted a modest 2% gain over 2006 and pending sales increased 11% during the same period, helping to curb inventory growth. As sales have slowed from 2006 record levels, inventory has increased each of the previous 6 months, finally leveling in July at 6.2 months. However, while pending sales growth increased for July, available listing growth continues to out pace sales and could affect inventory levels in coming weeks and months.

A recent Houston Business Journal reader survey indicated that some Houston buyers and sellers are taking a “wait and see” approach to buying and selling in today’s market. And just as potential home buyers need access to loans, the mortgage industry is suffering a cash shortage that will make financing more difficult. The road ahead is unclear, and the housing market is unlikely to match the peaks of 2006 for some time, but Houston’s economy remains strong with good job growth and low unemployment — key factors for buying and selling decisions.

Since December 2006, available listings increased each month, adding to inventory as sales volume has slowed. Houston’s July inventory level matched June’s, reflecting the rebound in sales and pending contracts that slowed inventory growth. Any further inventory build up could work to lower prices in coming months. Recent sales declines haven’t had a dramatic impact on prices so far, but if our office email and fax traffic is any indication, local builders are holding inventory they need to move — adding to a market with plenty of available units.

Inventory determines the time it would take to sell available listings at the monthly average sales pace for the previous 12 months. Inventory below 5 months indicates a seller’s market, as buyers compete for limited housing. Inventory levels between 5 and 6 months reflect a balanced market. Inventory levels beyond 6 months are considered excessive, shifting the market advantage to the buyers, and potentially lowering sales prices and lengthening the timed needed to sell.

According to the Freddie Mac weekly mortgage survey, illustrated on the adjacent chart, the average 30-year fixed rate for the Southwestern US, including Houston, has increased to its highest 2007 levels in June and July, reaching 6.73% for 30 year fixed-rate loans. Other loan products have tracked the rise and fall of the fixed rate products, with the 1 year ARM showing the most volatility.

Renewed inflation concerns and economic growth have worked together to push rates higher in recent weeks. While economists report that the housing sector is putting a drag on economic growth — housing starts and builder confidence are down — that news hasn’t worked to reduce interest rates until August. The Federal Reserve left rates unchanged until recently, when mortgage industry problems spilled over into other sectors, threatening economic growth. The future for rates is unclear — while the Fed will be working to reduce rates, investors are wary of current mortgage troubles and attracting investors into the current muddle will force rates up.

Houston Median House Price

July’s median price single family home price was $155,100, a .5% year-to-year decrease from 2006’s value of $155,890 and a 3.1% decrease from last month. Despite slower sales numbers, the median house price for single family homes has grown consistently in year-to-year comparisons throughout the past 17 months, posting its first year-to-year decline for some time in July 2007.

Charting median single family prices for the previous 18 months reveals the seasonal variations and year-to-year growth. Year-to-year comparisons are made to reduce seasonal variations, reflecting actual value changes.

Houston Metro Area Market Activity

Year-to-year market comparisons illustrate a modest increase in July’s sales. Available listing inventory grew in year-over-year comparisons, but didn’t move past June’s 6.2 month level. Available listing growth continues to out pace sales and pending contract growth (listings under contract) — a trend with implications for further inventory growth in coming months.

Houston Single Family Housing Year-to-Year Comparison

July	2006	2007	Change
Sales Closed	6,717	6,856	2.0 %
Median Price	$155,890	$155,100	1.0 %
Active Listings	32,233	37,383	16.0 %
Pending Listings	4,245	4,707	1.1 %
Month’s Inventory	5.6	6.2	11.9 %
Days On Market	71	71	0.0 %

Humble & Atascocita Area Median House Price

Atascocita | Crosby | Humble | Huffman | Kingwood Glen | Kings River | West Lake Houston | Beltway 8

The single family home median price for the Humble & Atascocita area (HARMLS Area 1) was $151,900 — a 4.0 % increase from July 2006. The Humble & Atascocita market’s hotness ranking was 9th for the Houston area — 14.7% of available listings were under contract. Sales were up 3.5% while available listings increased 16.5%, adding to inventory again this month.

Inventory levels increased in year-to-year and month-to-month comparisons. Since December 2006, area inventory has increased from 5.0 months to 6.2 months. Pending contract growth has not kept pace with available listing growth, adding to inventory each of the last 7 months.

Charting median single family prices over the previous 18 months illustrates year-to-year price appreciation. Year-to-year comparisons are made to reduce seasonal variations.

Humble & Atascocita Area Single Family Housing Year-to-Year Comparison

July	2006	2007	Change
Sales Closed	279	289	3.5 %
Median Price	$146,000	$151,900	4.0 %
Active Listings	1,259	1,467	16.5 %
Pending Listings	194	215	10.8 %
Month’s Inventory	5.6	6.2	10.71 %
Days On Market	79	80	1.2 %

Kingwood Area Median House Price

Kingwood | Huffman | New Caney | Porter

The median price for Kingwood Area (HARMLS Area 32) single family homes was $163,500 —- a 9.2 % decrease. The Kingwood area market’s hotness ranking was 5th in Houston with 17.3% of available listings under contract. Sales increased 17.2 %. Pending sales increased 5.9 %. Inventory was up again to 4.5 months, a 12.5 % increase.

Note: Area 32 is a small sales area with wide variation in sales prices — this can create wide median price swings as illustrated in the chart above, reducing the effectiveness of the chart in illustrating price trends.

Year-to-year comparisons are made to reduce seasonal variations. Charting median single family prices for the previous 18 months reveals the seasonal variations present over the sales year and reflects price declines as we leave the selling season.

Kingwood Area Single Family Housing Year-to-Year Comparison

July	2006	2007	Change
Sales Closed	134	157	17.2 %
Median Price	$180,120	$163,500	9.2 %
Active Listings	461	520	12.8 %
Pending Listings	85	90	5.9 %
Month’s Inventory	4.0	4.5	12.5 %
Days On Market	62	51	17.7 %