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: April 2008: Lowest sales for April since 2004 -- sales declines in all price classes above $80K

Residential Housing Market Summary

• Houston’s residential real estate housing market experienced another year-to-year real estate sales decline of 12.8% in April 2008 — the slowest April sales volume since 2004. 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 for the month. So far decreasing real estate sales have not brought about any appreciable affect on Houston’s median home price, which remained unchanged in year-to-year comparisons. Other market indicators have been trending negative for months — pending sales are down almost 10% while DOM and inventory supply are up for the month. Today’s activity reflects the significant market changes affecting home buyers — the easy credit terms of previous years are over, shutting between 30 and 40% of potential home buyers out of the real estate market. The remaining home buyers that do qualify for financing are moving cautiously before committing to a real estate purchase, and they are still closing a significant number of sales each month.


• Sales for all property classes declined 12.8% in year-to-year comparisons — sales for single-family homes declined 11%. Nationally, existing-home sales were down 8.0% from last year.


• Sales were weakest for properties priced between $80,000 and $200,000, declining 19.2% in year-to-year comparisons. Sales between $200,000 and $500,000 were 6.7% and sales for homes priced above $500,000 were down 5.6%.


• The Single-family median price remained unchanged at $151,000. For the US market, the median price declined 8.0% from $219,900 to $202,300.


• Pending sales — listings under contract expected to close within 30 days — declined 9.6% from last year. In month-to-month comparisons, pending sales increased 7.6% from last month.


• Inventory Supply was at a 6.4 month supply for the month — currently a 12 month high. Inventory is up 1.6% from last month and up 10.3% from last year. At a 6.4 month supply, Houston inventory remains below a national housing supply of 11.2-month supply at the current sales pace, up from a 10.0-month supply in March.


• Days-on-market (DOM) — was 84 for the month, up from 74 DOM last year.

Houston Residential Housing Closed Sales

Existing home sales were down to their lowest level since 2004 — down 12.8% from last year for all property types . Single-family sales were down 11.0%. Sales for townhouses and condos were down 20%. Multi-family and residential lot sales were down 58% and 24% respectively. Real estate sales for high-rise was up 16%.

Sales for homes priced below $80,000 were up 22.1%. Homes priced between $80,000 and $200,000 were down 19.2%. Sales for single-family homes priced between $200,000 and $500,000 were down 6.7%, and sales for homes priced above $500,000 were down 5.6%.

Rental numbers were up — single-family rentals were up 15% to 1,462. The median rental price rose 4% to $1,250.

Houston Single-Family Inventory Supply

Houston’s 6.4 month inventory supply remains below the national average existing-home supply of 11.2 months. While still far below the national average, Houston’s inventory supply is now at the highest level for the last 18 months. Until now, the 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.

The number of available homes (active listings) at the end of the month stood at 52,270, up 962 listings from last month’s total of 53,080. When compared to last year, available listings are up 6.3%. As the traditional selling season begins, active-listing growth could out pace current sales volumes and 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.

Closed Sales by Price Class

Price Class	2006	2007	2008	Change
0 – $79K	436	560	684	22.1 %
$80K – $199K	3,625	3,611	2,916	19.2 %
$200K – $499K	1,440	1,565	1,462	6.7 %
$500K +	261	322	304	5.6 %

Houston Year-to-Year Comparison

April	2007	2008	Change
Sales Closed	7,372	6,432	12.8 %
Median Price	$150,000	$150,000	0.0 %
Active Listings	49,946	53,080	6.7 %
Pending Listings	5,460	4,935	9.6 %
Month’s Inventory	5.8	6.4	11.6 %
Days On Market	74	84	13.5 %

Weekly Average Rates

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 — news analysis indicates that no further rate cuts are expected.

Critics counter that the lower rates will only add to inflationary pressures already being felt by energy and commodity consumers. Many critics cite 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 YR 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.

As we noted in this illustration last month, 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. The gap narrows in the current month as anxiety over the credit crisis has abated somewhat as bond prices have returned to a relatively normal relationship with long-term rates.

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

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

Single-family closed sales were down 6.4% from last year. Month-to-month sales increased 14.7% from last month. 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 months 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 remained at a 6.2 month’s supply for the month. In year-to-year comparisons, inventory was up 3.3% from last year. The number of active listings decreased 3.15% from last month — dropping from 1,430 to 1,385.

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

April	2007	2008	Change
Sales Closed	234	219	6.4 %
Median Price	$162,000	$147,760	8.8 %
Active Listings	1,430	1,385	3.1 %
Pending Listings	176	180	2.3 %
Month’s Inventory	6.0	6.2	3.3 %
Days On Market	82	95	15.9 %

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

Single-family closed sales were down 8.1% from last year. Month-to-month sales increased 16.8% from last month. 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 months 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 decreased 2.9% from last year and was down by the same margin (2.9%) from last month. Declining sales activity and increasing listings since the beginning of the year added 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 2007. Inventory growth was reversed in September and has declined steadily until last month’s increase.

At 6.7 months, the market is trending towards a market advantage favoring home buyers. If sales volumes slide, expect higher inventory supply.

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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

April	2007	2008	Change
Sales Closed	174	160	8.0 %
Median Price	$109,850	$113,200	3.0 %
Active Listings	1,116	1,111	0.4 %
Pending Listings	139	154	10.8 %
Month’s Inventory	6.9	6.7	2.9 %
Days On Market	72	91	26.4 %

Closed Sales | NE Houston Kingwood | HARMLS Area 32

Single-family closed sales were down 23.8% in year-to-year comparisons. Month-to-month sales increased 2.13% from last month. Compared to the 1st quarter of 2007, Kingwood is tracking behind last year’s sales volumes — area home owners should expect more competition and slower selling in the months 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 46.0% from last year — the second highest inventory level for the last 18 months. In month-to-month comparisons, inventory was down 1.81% from last month. Active listing growth and declining sales are reversing recent inventory declines — active listings grew 24.1% while sales declined 23.8% from last month, activity that’s going to add to area inventory.

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 2007. 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 5.4 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 pace 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

April	2007	2008	Change
Sales Closed	126	96	23.8 %
Median Price	$178,500	$177,000	0.8 %
Active Listings	436	541	24.1 %
Pending Listings	83	71	14.5 %
Month’s Inventory	3.7	5.4	45.9 %
Days On Market	71	69	2.8 %