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: March 2008: Sales decline for 8th consecutive month -- inventory climbs to 12 month high

Residential Housing Market Summary

• Houston’s residential housing market experienced another year-to-year sales decline of 17.3% in March 2008 — making that the eight consecutive monthly decline since July 2007. Sales declines were across most property and price classes. In previous months, most sales declines were restricted to homes priced between $80,000 and $200,000, but higher priced home sales posted noticeably lower sales volumes in March. So far decreasing sales have not brought about any appreciable affect on Houston’s median home price, which remained steady in year-to-year comparisons, dropping only .1% from last year’s median sales price of $151,080 to $151,000. Other market indicators are also trending negative — pending sales are down almost 19% while DOM and inventory supply are up in March to near their 12 month highs. Today’s activity reflects the significant market changes affecting home buyers — the easy credit terms of previous years are over, and the remaining home buyers that do qualify for financing are moving cautiously before committing to a purchase.


• Sales for all property classes declined 17.3% in March year-to-year comparisons — sales for single-family homes declined 16% when compared to March 2007. Nationally, existing-home sales were down 19.3% from last March.


• Sales were weakest for properties priced between $80,000 and $200,000, declining 21.7% in March year-to-year comparisons, but sales between $200,000 and $500,000 were also down 11.8 . Sales for homes priced above $500,000 were down 12.3.


• The Single-family median price remained virtually unchanged in March, declining only .1% from last year — the median single-family price for March 2008 was $151,000 as compared to $151,080 last year. For the US market, the median price declined 8.2% from $213,500 to $195,900 for the month.


• Pending sales — listings under contract expected to close within 30 days — declined 18.9% when compared to March 2007. In month-to-month comparisons, pending sales increased 6.1% from February 2008.


• Inventory Supply was at a 6.3 month supply in March — currently a 12 month high. Inventory is up 3.3% from February 2008 and up 14.5% from March 2007. At a 6.3 month supply, Houston inventory remains below a national housing supply of 9.6 months.


• Days-on-market (DOM) — was 87 for March 2008, down slightly from 92 DOM in February 2008. It’s the the 2nd highest DOM for the last 18 months and an 10.1% increase since March 2007’s 79 DOM.

Houston Residential Housing Closed Sales

Existing home sales were down for the 8th consecutive month in March 2008 — down 17.3% for all property types. Single-family sales were down 16%. Sales for townhouses and condos were down by 9%. Multi-family, high-rise, and residential lot sales were down 41%, 14% and 36% respectively.

Homes priced between $80,000 and $200,000 were down 21.7% in March. Sales for single-family homes priced between $200,000 and $500,000 were down 11.8%, and sales for homes priced above $500,000 were down 12.3%.

Rental numbers were up again this month — single-family rentals were up 10% to 1,554. 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 6.3 month inventory supply remains below the national average existing-home supply of 9.6 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 March stood at 52,270, up 962 listings from February’s total of 51,308. When compared to March 2007, available listings are up 9.2%. Decreasing sales and active-listing growth could produce further inventory increases in coming months.

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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.

March 2006 – 2008 Closed Sales by Price Class

Price Class	2006	2007	2008	Change
0 – $79K	549	595	618	3.9 %
$80K – $199K	4,249	3,623	2,838	21.7 %
$200K – $499K	1,513	1,569	1,384	11.8 %
$500K +	284	334	293	12.3 %

Houston Year-to-Year Comparison Mar 2007 – 2008

March	2007	2008	Change
Sales Closed	7,267	6,098	16.1 %
Median Price	$150,590	$151,000	0.3 %
Active Listings	47,872	52,270	9.2 %
Pending Listings	5,653	4,585	18.9 %
Month’s Inventory	5.5	6.3	18.9 %
Days On Market	79	87	10.1 %

Weekly Average Rates — Last 14 months

Since the beginning of 2008, the Federal Reserve has cut its fed funds rate 4 times from 4.24% to its most recent cut to 2.0% made at the end of April. The 25 basis point cut to 2 percent is the lowest in four years. Recent cuts have been made to stimulate growth and lower the effect the mortgage and housing crisis is having on economic activity.

Critics counter that the lower rates will only add to inflationary pressures already being felt by energy and commodity consumers. Many critics site the Fed’s low rate policy as the cause of the housing boom and its subsequent bust.

Expect the Fed to maintain its current rate to ward off any repeats of the housing bubble. That doesn’t mean mortgage rates can’t come down further — recessionary pressures and investor confidence will do more to lower long term bond rates than Fed policy. For now, don’t expect any significant changes in interest rates — up or down — until the economy breaks one way or the other.

Typically, long term mortgage rates track the 10 year Treasury Bonds with an average 1.8% spread according to financial sources like the Wall Street Journal. Mortgage rates, which tend to track long-term Treasury yields, rose during the last 60 days despite the Fed action to lower lending costs.

Illustrated by the accompanying chart, the 30 YR Mortgage Rate tends to follow the Average Spread (which equals the 10 YR Bond + 1.8%) until 2008 when it diverges from its normal track beginning in January.

Fears about mortgage securities risks are driving yields higher as investors are demanding larger returns in today’s high-risk climate. Investor demand for higher returns — read “risk premium” — is the result of today’s market uncertainties surrounding mortgage-backed security valuations, and that demand is driving mortgage rates higher. If investor market concerns can be resolved and investors re-enter the market in larger numbers, expect mortgage rates to realign with 10 year Treasury Bond rate, lowering borrowing costs for home buyers further.

Sterling Weekly Market Updates

Download Sterling’s Market Intelligence Reports — weekly summaries illustrating real estate asking price trends and other important market metrics for NE Houston areas including Spring, Humble (Atascocita), Kingwood and Crosby, Texas.

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

Single-family closed sales were down 21.7% from 244 closed sales in March 2007 down to 191 closed sales in March 2008 in year-to-year comparisons. Month-to-month sales increased 14.4% from February to March 2008. Compared to the 1st quarter of 2007, Humble & Atascocita single-family sales are tracking behind last year’s sales volumes — area home owners should expect more competition and slower selling in the month’s ahead.

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 rose to a 6.2 month’s supply from 6.1 in February 2008. In year-to-year comparison, inventory was up 10.7% from March 2007 when it was 5.6. The number of active listings increased slightly from February to March — from 1,389 to 1,392.

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 until January, helping reverse recent inventory growth.

At 6.2 months, the market remains relatively balanced — neither favoring buyers or sellers. However, buyers and sellers for homes priced between $80,000 and $200,000 may be experiencing market conditions favoring buyers as increased foreclosure activity and limited credit holds down existing and new home sales. Area home owners can expect more competition and slower sales in coming months in an increasingly competitive market reflected in the listing growth and longer DOM (Days-on-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.

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

March	2007	2008	Change
Sales Closed	244	191	21.7 %
Median Price	$155,500	$155,000	0.3 %
Active Listings	1,341	1,392	3.8 %
Pending Listings	228	185	18.9 %
Month’s Inventory	5.6	6.2	10.7 %
Days On Market	81	109	34.6 %

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

Single-family closed sales were down 11.0% from 154 closed sales in March 2007 down to 137 closed sales in March 2008 in year-to-year comparisons. Month-to-month sales increased 2.24% from February to March 2008. Compared to the 1st quarter of 2007, Spring—Cypresswood is tracking behind last year’s sales volumes — area home owners should expect more competition and slower selling in the month’s ahead.

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 increased 1.5% in March 2008 to a 6.9 month supply. Declining sales activity and increasing listings since the beginning of the year are adding to inventory supply — home owners can expect increased selling competition as reflected in the longer DOM (Days-on-market) since January 2008.

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 until last month’s increase.

At 6.9 months, the market is trending towards a market advantage favoring home buyers. If sales volumes continue to slid, expect higher inventory supply as we enter the selling season.

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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

March	2007	2008	Change
Sales Closed	154	137	11.0 %
Median Price	$108,000	$103,000	4.6 %
Active Listings	1,084	1,147	5.8 %
Pending Listings	138	141	2.2 %
Month’s Inventory	6.8	6.9	1.5 %
Days On Market	88	96	9.1 %

Closed Sales | NE Houston Kingwood | HARMLS Area 32

Single-family closed sales were down 24.2% in year-to-year comparisons. Month-to-month sales increased 27.1% from February to March 2008 from 74 to 94 sales. Compared to the 1st quarter of 2007, Spring—Cypresswood is tracking behind last year’s sales volumes — area home owners should expect more competition and slower selling in the month’s ahead.

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 48.6% in March to a 5.5 month supply, the highest inventory level for the last 18 months. Active listing growth and declining sales are reversing recent inventory declines — active listings grew 8.6% again from February to March 2008.

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. Inventory has increased from 4.1 months to 4.9 months since December 2007.

At 5.5 months, the market favors home sellers — although the current inventory trend is up for the last 3 months. The number of active listings has grown steadily since December 2007. If active listing growth continues to out paces sales, expect higher inventory numbers and a shift towards a neutral market favoring neither buyer or seller.

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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

March	2007	2008	Change
Sales Closed	124	94	24.2 %
Median Price	$162,000	$185,300	14.4 %
Active Listings	424	565	33.3 %
Pending Listings	102	53	48.0 %
Month’s Inventory	3.7	5.5	48.6 %
Days On Market	57	71	24.6 %