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: June 2008: Houston median house price buoyant despite slower sales

Houston’s Residential Housing Market Conditions

• Houston’s median home price for existing single-family housing is positively buoyant despite steady declines in sale volumes in recent months — the median price increased 1.5% in June 2008 when compared to last year.


• Houston’s residential real estate housing market sales were lower again in June 2008 with a year-to-year sales decline of 15.1% — the slowest June sales volume since 2004. Nationally, sales were down 15.5%. Sales declines were across most property and price classes with the single largest declines in homes priced between $80,000 and $200,000. Pending sales were down over 20% indicating that sales declines will continue. Inventory supply and DOM are up almost 10% in year-to-year comparisons.


• Sales for all property classes declined 15.1% in year-to-year comparisons — sales for single-family homes were off 15%. Nationally, existing-home sales were down 15.5% from last year.


• Sales were weakest for properties priced between $80,000 and $200,000, declining 22.2% in year-to-year comparisons. Sales for homes priced between $200,000 and $499,000 were off in 10.3%.


• The Single-family median price rose 1.5% to $162,000. For the US market, the median price declined 6.1% from $229,000 to $215,100.


• Pending sales — listings under contract expected to close within 30 days — declined 20.6% from last year. In month-to-month comparisons, pending sales were down 7.7% from May.


• Inventory Supply was at a 6.7 month supply for June — another a 12 month high. Inventory is up 8.1% from last year and up 1.5% from last month. At a 6.6 month supply, Houston inventory remains below a national housing inventory of 11.1 months.


• Days-on-market (DOM) — was 76 for the month, up from 71 DOM in June 2007.

Comparing Residential Sales | 2005 – 2008

Despite this year’s slower sales — a significant number of property sales are closing each month, although not at the same peak levels the Houston market experienced during the years 2005 through 2007.

Existing Houston home sales are down in 2008 to their lowest volumes since 2003 and 2004. The chart represents sales for all property classes during the first half of the year for sales years 2005 through 2008. At 7,237, June’s sales fell below June 2005 (7,880) and June 2004 (7,415), but above June 2003 (6,311).

Credit restrictions, foreclosure activity and concerns for falling home prices are keeping some buyers out of today’s market — by some estimates, up to 40% of home buyers have been sidelined by today’s market realities. Until foreclosure and bank-owned inventory is absorbed, Houston’s housing market will likely experience sales declines for the remainder of 2008.

Houston Residential Housing Sales

Existing home sales were down to their lowest level since 2004 — down 15.1% from last year for all property types . Single-family sales were down 15.0%. Sales for townhouses and condos were down 10%. Multi-family and residential lot sales were down 26% and 28% respectively. Real estate sales for high-rise properties was down 14%. Country Home sales also declined 23%.

Sales for homes priced below $80,000 were up 27.6%. Homes priced between $80,000 and $200,000 were down 22.2%. Sales for single-family homes priced between $200,000 and $500,000 were down 10.3%, while sales for homes priced between $500,000 and $1,000,000 were up 8.1% and sales for homes priced above $1,000,000 were up 2.9%.

Rental numbers were up again — single-family rentals were up 12% to 1,826 for the month. All other property rental types were up over 20%. The median rental price for single-family rentals was unchanged at $1,300.

Houston Single-Family Inventory Supply

Houston’s 6.7 month inventory supply remains below the national average existing-home supply of 11.1 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 53,792, up less than 1% from last month. When compared to last year, available listings are up 2.0% — 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 environment 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	524	558	712	27.6 %
$80K – $199K	4,634	4,080	3,175	22.2 %
$200K – $499K	2,112	2,099	1,882	10.3 %
$500K – $999K	330	337	343	1.8 %
$1,000K +	93	102	105	2.9 %

Houston Year-to-Year Comparison

June	2007	2008	Change
Sales Closed	8,529	7,237	16.7 %
Median Price	$160,000	$162,000	1.3 %
Active Listings	52,718	53,792	2.0 %
Pending Listings	5,615	4,456	20.6 %
Month’s Inventory	6.2	6.7	8.1 %
Days On Market	71	76	7.0 %

Weekly Average Rates

Inflation concerns and the prospect of Federal Reserve short-term rate hikes to fight it helped push mortgage rates higher in July 2008. Consumer prices jumped in June to their highest levels in nearly 3 years. Mortgage rates jumped an average of .30% in July — nearly matching last summer’s highs when the average 30 YR fixed rate reached 6.72%.

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. Inflation concerns could prompt the Federal Reserve to increase the rate before the end of the year — expectations that helped lift mortgage rates higher in July.

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 16.8 % from last year. Month-to-month sales decreased 4.1 % 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 increased 6.6% to a 6.5 month supply when compared to last year. In month-to-month comparisons, inventory supply is up 4.8% from last month. The number of active listings increased 2.9% from last month while sales declined 4.1% — helping raise inventory supply to it’s highest level in 12 months.

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 decreased each month until January, helping reverse inventory growth. Since January 2008, slower sales have boosted inventory from 6.0 to 6.5 months.

At 6.5 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 tamps down sales for new and existing homes. 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

June	2007	2008	Change
Sales Closed	285	237	16.8 %
Median Price	$152,000	$156,450	2.9 %
Active Listings	1,443	1,420	1.6 %
Pending Listings	238	147	38.2 %
Month’s Inventory	6.1	6.5	6.6 %
Days On Market	78	83	6.4 %

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

Single-family closed sales were down 19.9% from last year. Month-to-month sales decreased 18.1% 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 9.2% from last year. In month-to-month comparisons, inventory supply was up 4.6% from last month. Increased sales activity since the beginning of the year kept inventory growth flat as buyer demand was boosted by lower median prices. If sales slow and the number of available listings continues to increase, inventory will grow.

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, but is picking up again as sales slow.

At 6.9 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. However, this month’s sales and listing growth points towards higher inventory and increased competition among 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

June	2007	2008	Change
Sales Closed	186	149	19.9 %
Median Price	$110,940	$110,000	0.8 %
Active Listings	1,245	1,111	10.8 %
Pending Listings	162	122	24.7 %
Month’s Inventory	7.6	6.9	9.2 %
Days On Market	86	82	4.7 %

Closed Sales | NE Houston Kingwood | HARMLS Area 32

Single-family closed sales were down 24.1% in year-to-year comparisons. In month-to-month comparisons, sales were down 3.6% from May. 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 35.5% from last year — the highest area inventory level for the last 18 months. In month-to-month comparisons, inventory was up 5.2% 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 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 2008, inventory has increased from 4.1 months to 6.1 months.

At 6.1 months, the market would tend to favor home sellers, but a steep growth in inventory supply fueled by higher listing activity and slower sales will begin to shift the market advantage towards home buyers. As active listing growth continues to out pace sales, expect higher inventory numbers and a shift from a neutral market favoring neither buyer or seller to a market favoring buyers.

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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

June	2007	2008	Change
Sales Closed	141	107	24.1 %
Median Price	$192,000	$208,000	8.3 %
Active Listings	510	581	13.9 %
Pending Listings	98	72	26.5 %
Month’s Inventory	4.5	6.1	35.5 %
Days On Market	50	64	28.0 %