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: May 2008: Today's housing market conditions favor buyers as sales trend negative

Residential Housing Market Conditions

• Houston’s residential real estate housing market experienced another year-to-year real estate sales decline of 16.7% in May 2008 — the slowest May sales volume since 2004. Nationally, sales were down 15.9%. Sales declines were across most property and price classes with the single largest declines in homes priced between $80,000 and $200,000. Despite months of consecutive sales declines, Houston’s median home price remained unchanged for the month at $155,000. Most market indicators have been trending negative for months — pending sales were down over 15% while inventory and DOM were up 10.0%.


• Sales for all property classes declined 16.7% in year-to-year comparisons — sales for single-family homes were off 15%. Nationally, existing-home sales were down 15.9% from last year.


• Sales were weakest for properties priced between $80,000 and $200,000, declining 22.4% in year-to-year comparisons. Sales for all price classes above $80,000 were off in May from last year.


• The Single-family median price remained unchanged at $155,000. For the US market, the median price declined 6.3% from $222,700 to $208,600.


• Pending sales — listings under contract expected to close within 30 days — declined 15.6% from last year. In month-to-month comparisons, pending sales were also down from April 2.2%.


• Inventory Supply was at a 6.6 month supply for May — another a 12 month high. Inventory is up 3.1% from April and up 10.0% from last May. At a 6.6 month supply, Houston inventory remains below a national housing inventory of 10.8 months.


• Days-on-market (DOM) — was 78 for the month, up from 71 DOM last May.

Houston Residential Housing Sales

Existing home sales were down to their lowest level since 2004 — down 16.7% from last year for all property types . Single-family sales were down 15.0%. Sales for townhouses and condos were down 19%. Multi-family and residential lot sales were down 32% and 35% respectively. Real estate sales for high-rise properties was down 15%. country Home sales also declined 30% in May.

Sales for homes priced below $80,000 were up 16.8%. Homes priced between $80,000 and $200,000 were down 22.4%. Sales for single-family homes priced between $200,000 and $500,000 were down 11.4%, and sales for homes priced between $500,000 and $1,000,000 were down 12.9%. Sales for home above $1,000,000 were down 10.5%.

Rental numbers were up again — single-family rentals were up 19% to 1,754 for May. All other property rental types were up approximately 10%. The median rental price for single-family rentals was unchanged at $1,250.

Houston Single-Family Inventory Supply

Houston’s 6.6 month inventory supply remains below the national average existing-home supply of 10.8 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 53,305, up 225 listings from last month’s total of 53,080. When compared to last year, available listings are up 5.8% — these additional listings are staying on the market longer as sales have slowed for the 1st half of 2008. Some Houston neighborhoods are already experiencing market conditions favorable to buyers with today’s tight credit sidelining potential borrowers. Higher foreclosure activity is adding inventory in many of the same neighborhoods affected by the credit crunch, giving home buyers additional negotiating leverage.

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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	532	642	750	16.8 %
$80K – $199K	4,461	4,078	3,164	22.4 %
$200K – $499K	1,883	1,959	1,735	11.4 %
$500K – $999K	264	311	271	12.9 %
$1,000K +	77	95	85	10.5 %

Houston Year-to-Year Comparison

May	2007	2008	Change
Sales Closed	8,532	7,110	16.7 %
Median Price	$155,000	$155,000	0.0 %
Active Listings	50,376	53,305	5.8 %
Pending Listings	5,722	4,828	15.6 %
Month’s Inventory	6.0	6.6	10.0 %
Days On Market	71	78	9.9 %

Weekly Average Rates

As the economy has slowed and inflation worries grow, interest rates have increased an average of 1/2 a percent in June after remaining relatively stable throughout May. As energy prices climb and are absorbed throughout the economy, long-term interest rates will reflect the expectation for inflation.

As some neighborhood home prices decline, home buyers already hurting for mortgage options will see some of their potential savings eroded by higher lending and interest costs. Higher rates will make a home purchase unaffordable for others. Higher rates could increase local foreclosure activity, as non-traditional loans (ARM, Option-ARM) reset to higher rates. These affects are most apparent in neighborhoods priced between $80,000 and $200,000 — those hit hardest by the credit and foreclosure crisis — but other neighborhoods will also feel the effects of higher lending costs, keeping housing out of reach for some borrowers.

Since the beginning of 2008, the Federal Reserve has cut its fed funds from 4.25% to its most recent cut to 2.0% made at the end of April. News reports indicate that no further rate cuts are expected in light of inflationary worries caused by high energy prices and lingering credit doubts among lenders.

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.

These weekly reports are available free of charge and available online for a limited time. You can find out more here

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

Single-family closed sales were down 1.2% from last year. Month-to-month sales increased 12.8% 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 4.3% from last month — dropping from 1,442 to 1,380.

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. After October, the number of active listings has decreased each month until January, helping reverse recent inventory growth. Since January, slower sales have given a modest boost to inventory from 6.0 to 6.2 months.

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.

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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

May	2007	2008	Change
Sales Closed	250	247	1.2 %
Median Price	$149,970	$155,000	3.4 %
Active Listings	1,442	1,380	4.3 %
Pending Listings	213	196	8.0 %
Month’s Inventory	6.0	6.2	3.3 %
Days On Market	82	73	11.0 %

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

Single-family closed sales were down 10.3% from last year. Month-to-month sales increased 13.8% 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 9.6% from last year and was down 1.5% from last month. Increased sales activity since the beginning of the year kept inventory growth flat — demand boosted by lower median prices.

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 March’s increase. Inventory has dropped modestly since.

At 6.6 months, the market is trending towards a market advantage favoring home buyers. If recent lower home prices boost sales and inventory drops, we could see a shift back to a neutral or balanced 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 | N Houston Spring & Cypresswood | HARMLS Area 12

May	2007	2008	Change
Sales Closed	203	182	10.3 %
Median Price	$117,000	$103,250	11.8 %
Active Listings	1,205	1,086	9.9 %
Pending Listings	142	176	23.9 %
Month’s Inventory	7.3	6.6	9.6 %
Days On Market	76	82	7.9 %

Closed Sales | NE Houston Kingwood | HARMLS Area 32

Single-family closed sales were down 22.4% in year-to-year comparisons. Month-to-month sales increased 15.6% 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 45.0% from last year — the highest area inventory level for the last 18 months. In month-to-month comparisons, inventory was up 7.4% from last month. Active listing growth and declining sales since the beginning of the year are adding to inventory — active listings grew 20.7% while sales declined 22.4% from last year.

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 2008. Since the beginning of the year, inventory has increased from 4.1 months to 5.8 months.

At 5.8 months, the market tends to favor home sellers — although the current inventory trend is up for the last 3 months — and some neighborhoods will be affected differently according to local conditions. 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

May	2007	2008	Change
Sales Closed	143	111	22.4 %
Median Price	$189,100	$181,450	4.0 %
Active Listings	468	565	20.7 %
Pending Listings	94	65	30.9 %
Month’s Inventory	4.0	5.8	4.5 %
Days On Market	60	60	0.0 %