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: January 2008: Negative local sales trends point towards uncertain market outlook

Residential Housing Market Summary

• Houston’s residential housing market continues to outperform much of the US — with strong employment, affordable housing, and low interest rates, local buyers with good credit are finding loans and closing purchases. Although Houston’s real estate market is still closing a significant sale’s volume, by most measures, today’s sales trends are in negative territory. Uncertainty surrounding recessionary fears, rate increases, and price declines could keep some buyers out of the market until the uncertainty is resolved.


• Sales for all property classes declined 17.2% in January year-to-year comparisons — sales for single-family homes declined 12% when compared to January 2007. Nationally, existing-home sales were down 23.4% from last January.


• Sales were weakest for properties priced between $80,000 and $200,000, declining 22.3% in January year-to-year comparisons. In the same year-to-year comparisons, sales between $200,000 and $500,000 were down 7.7% and sales priced above $500,000 were up 26%.


• Single-family prices slid 2.8% in January 2008 — the median single-family price was $139,000 as compared to $143,000 for January 2007. For the US market, the median price declined 4.6% to $201,100 for the month.


• Pending sales — listings under contract expected to close within 30 days — declined 11.3% when compared to January 2007. In month-to-month comparisons, pending sales increased 13% over December 2007. The active-pending ratio stands at 13.1 — 13.1 active listings for each pending sale for all property classes and up from last month’s 12.0. The declining number of pending sales and the growth in the active-pending ratio would indicate additional inventory growth is possible as sales volumes continue to decline.


• NAR’s Pending Home Sales Index — a forward-looking sales indicator — was down 1.5% in December 2007, indicating that future home sales at the national level are expected to decline.


• Inventory Supply was at a 6.0 month supply in January — up 1.6% from December 2007 and up 18.1% from January 2007. At a 6.0 month supply, Houston inventory remains below a national housing supply of 10.3 months.


• Days-on-market (DOM) — was 92 for January 2008, the highest DOM for the last three years and an 8% rise from December’s 85 DOM.


• Texas added jobs in December — state employment growth was up, but at a slower pace than last year. Locally, Houston’s job growth was less than 1% compared to last December. State unemployment remains at historic lows.

Houston Residential Housing Closed Sales — January 2008

Existing home sales were down for the fifth consecutive month in January 2008. Down 17.2% for all property types, January’s sales were the lowest in 3 years. Single-family sales were down 12%. Sales for townhouses and condos were also down by 29%. Multi-family sales and residential lots were down 52% and 29% respectively. High-rise sales were up 23%.

Homes priced between $80,000 and $200,000 make up more than half of area sales. Shopping for single-family homes priced between $80,000 and $200,000 is down dramatically — and explains most of the recent sales declines. Sales for single-family homes priced between $200,000 and $500,000 were down 7.7%, while sales for homes priced above $500,000 were up 26%.

Rental numbers were up again this month — single-family rentals were up 20% to 1,475. Despite recent rental growth, the median rental price remains stagnant at $1,200 as rental supplies have kept pace with demand.

Houston Single-Family Inventory Supply

Houston’s 6.0 month supply of inventory remains below the national average existing-home supply of 10.3 months. Houston’s market has been able to absorb the additional listings at current sales paces, keeping inventory growth in check and the market in balance between buyers and sellers. Houston’s inventory has not grown past a 6.3 month supply during the last 12 months.

The number of available homes (active listings) at the end of January stood at 50,709, up 1,143 listings from December’s total of 49,566. When compared to January 2007, available listings are up 13.4%. Month-end pending sales – those listings expected to close within the next 30 days – declined 11.3% from last year, but are up 13% from last month.

Decreasing sales and active-listing growth could produce higher inventory numbers in coming months as we near the traditional selling season. Pent-up supply — by way of home owners who have so far postponed selling in an uncertain climate — could increase inventory levels in coming months if market uncertainties are not resolved to potential home buyer’s satisfaction. Additional inventory would add additional downward pressure on home prices if home buyers are not enticed back into the market.

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Inventory describes 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.

January 2006 – 2008 Closed Sales by Price Class

Price Class	2006	2007	2008	Change
0 – $79K	400	423	550	30.7 %
$80K – $199K	2,317	2,619	2,034	22.3 %
$200K – $499K	812	946	873	7.7 %
$500K +	119	129	163	26.3 %

Houston Year-to-Year Comparison Jan 2007 – 2008

January	2007	2008	Change
Sales Closed	5,105	4,353	17.2 %
Median Price	$143,000	$139,000	2.8 %
Active Listings	44,685	50,709	13.4 %
Pending Listings	4,812	4,269	11.3 %
Month’s Inventory	5.1	6.0	18.1 %
Days On Market	80	92	15.0 %

Weekly Average Rates — Last 390 Days

The Fed cut a key interest rate — the Federal-Funds Rate, a benchmark or targeted interest rate charged between banks for overnight loans — twice during January. In an emergency meeting the week of January 24th, the Fed Funds rate was cut from 4.25% to 3.5% in reaction to banking-sector liquidity issues — aimed to calm roiling market reaction to the U.S. mortgage crisis.

The rate was cut again at the Fed’s regularly scheduled meeting at the end of January from 3.5% to 3.0%. The January cuts are expected to be followed by further rate cuts in coming months, although the final rate target is uncertain.

Mortgage rates, which tend to track long-term Treasury yields, rose at the end of January despite the Fed action to lower lending costs. Fears about mortgage securities risks are driving yields higher as investors are demanding larger returns in today’s high-risk climate. Credit-market issues could keep rates higher despite Fed action to lower short-term lending costs.

Sterling Weekly Market Updates

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Closed Sales | NE Houston Humble & Atascocita | HARMLS Area 1

Single-family closed sales were down 6.25% in year-to-year comparisons. Month-to-month sales dropped 37.5% from December to January. January’s sales were the lowest volume posted during the last 3 years since February 2005 when 126 sales were closed.

Local sales for homes priced between $80,000 and $200,000 make up the bulk of single-family sales in the Humble & Atascocita areas. Existing home sales in this price range have slowed the most — dropping 22% from 109 closed sales in January 2007 to 85 sales closed in 2008.

Charting single-family closed sales for the previous 18 months allows year-to-year comparisons and illustrates sales activity over time. Year-to-year comparisons are made to reduce seasonal variations.

Months Inventory | NE Houston Humble & Atascocita | HARMLS Area 1

Local inventory supply for NE Houston — Humble & Atascocita — single family housing was unchanged at a 6.0 month supply from December 2007. Although sales volumes are down, the number of active listings remained relatively unchanged from last month — helping keep inventory growth in check.

During much of the last 12 months, available listings grew faster than sales could remove them from the market place, raising inventory to a recent high of 6.5 months in September and October 2007. Since then, the number of active listings has decreased each month, helping reverse recent inventory growth.

At 6.0 months, the market remains relatively balanced. Fewer listings help offset slower sales and keeps the market in line — neither favoring buyers or sellers, although buyers and sellers for homes priced between $80,000 and $200,000 may be experiencing conditions favoring buyers as increased foreclosure activity and limited credit tamps down existing and new home sales.

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Inventory describes 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.

Sales 2007 – 2008 | NE Houston Humble & Atascocita | HARMLS Area 1

January	2007	2008	Change
Sales Closed	144	135	6.25 %
Median Price	$144,000	$143,000	0.70 %
Active Listings	1,250	1,378	10.24 %
Pending Listings	171	153	10.53 %
Month’s Inventory	5.2	6.0	15.38 %
Days On Market	89	115	29.21 %

Closed Sales | N Houston Spring & Cypresswood | HARMLS Area 12

Single-family closed sales were down 2.78% in year-to-year comparisons. Month-to-month sales dropped 10.26% from December to January. January’s sales were the lowest volume posted during the last 2 years since February 2006 when 98 sales were closed.

Local sales for home priced between $80,000 and $200,000 make up the bulk of single-family sales in the N Houston Spring & Cypresswood areas. Existing home sales in this price range were relatively unchanged — dropping only 2.6% from 113 closed sales in January 2007 to 110 sales closed in 2008.

Charting single-family closed sales for the previous 18 months allows year-to-year comparisons and illustrates sales activity over time. Year-to-year comparisons are made to reduce seasonal variations.

Months Inventory | N Houston Spring & Cypresswood | HARMLS Area 12

Local inventory supply for N Houston — Spring & Cypresswood — single family housing declined 5.1% in January to a 6.5 month supply. Declining active listing numbers helped reverse recent inventory growth — active listings were down in month-to-month comparisons by 4.4%.

During much of the last year, available listings grew faster than sales could remove them from the market place, raising inventory to a recent high of 8.0 months in August 2008. Inventory growth was reversed in September and has declined steadily through January 2008.

At 6.5 months, the market is maintaining a relative balance between buyers and sellers — although the declining trend inventory supply will tend to favor sellers. Pending sales — a forward looking sales indicator — was up 11% for January 2008 indicating stronger sales for February. Combined with a decrease in active listings, inventory could decline further increasing the market’s momentum towards home sellers.

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Inventory describes 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.

Sales 2007 — 2008 | N Houston Spring & Cypresswood | HARMLS Area 12

January	2007	2008	Change
Sales Closed	144	140	2.80 %
Median Price	$110,860	$103,950	6.2 %
Active Listings	1,047	1,104	5.4 %
Pending Listings	146	146	0.0 %
Month’s Inventory	6.6	6.5	1.5 %
Days On Market	68	97	42.6 %

Closed Sales | NE Houston Kingwood | HARMLS Area 32

Single-family closed sales were up 1.75% in year-to-year comparisons. Month-to-month sales dropped 30.1% from December to January. January’s sales were the lowest volume posted during the last 12 months since last January’s 57 closed sales.

Local sales for home priced between $80,000 and $200,000 make up the bulk of single-family sales in the NE Houston Kingwood area. While existing home sales in this price range have been down substantially in Houston, sales in this price range were up in the Kingwood area — rising over 32% from 28 closed sales in January 2007 to 37 sales closed in 2008.

Charting single-family closed sales for the previous 18 months allows year-to-year comparisons and illustrates sales activity over time. Year-to-year comparisons are made to reduce seasonal variations.

Months Inventory | NE Houston Kingwood | HARMLS Area 32

Local inventory supply for NE Houston — Kingwood area — single family housing increased 9.7% in January to a 4.5 month supply. Active listing growth and slower sales are reversing recent inventory declines — active listings grew 7.4% from December to January.

During much of the last year, available listings grew faster than sales could remove them from the market place, raising inventory to a recent high of 4.8 months in September 2008. Inventory growth was reversed in October and continued to decline until January.

At 4.5 months, the market favors home sellers — although the current inventory trend is up. Pending sales — a forward looking sales indicator — was up 18% for January 2008 indicating stronger sales for February. Additional February sales could keep inventory growth in check.

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Inventory describes 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.

Sales 2007 — 2008 | NE Houston Kingwood | HARMLS Area 32

January	2007	2008	Change
Sales Closed	57	58	1.8 %
Median Price	$187,000	$155,000	17.1 %
Active Listings	393	479	21.9 %
Pending Listings	62	59	4.8 %
Month’s Inventory	3.4	4.5	32.4 %
Days On Market	91	86	5.5 %