Early signs suggest falling mortgage rates could be pulling some homebuyers back into the housing market nationwide, but in January in Houston, it wasn’t enough to prevent home sales from plummeting for another month.
Single-family home sales nose-dived nearly 30 percent in January, year-over-year across the region, falling to 4,549 from 6,492 a year ago, according to new numbers from Houston Association of Realtors. It was the 10th consecutive month of year-over-year sales declines.
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Though the market is much cooler, the decline seems less stark compared with January 2020, before the initial impact of the pandemic hit the U.S., when there were 4,772 homes sold, about 4.6 percent more than this year.
So weaker sales volume now isn’t a sign of a market in distress, says HAR Chair Cathy Treviño with real estate firm Side.
“I think what’s happening now reflects more of a return to seasonal home sales trending — slower volume during the holidays and new year,” Treviño said. “Certainly consumers want assurances that inflation is subsiding, so if mortgage rates stabilize and homes continue hitting the market at more affordable price points, we could expect an upswing in sales later this year.”
Nationally there are signs that an easing of mortgage rates are slowly luring buyers to the market. After peaking at about 7.08 percent in the fall, the average rate for a 30-year fixed- rate mortgage have see-sawed their way down to 6.09 percent, according to Freddie Mac.
After five weeks of falling mortgage rates, more buyers are applying for mortgages — an early indicator of future demand, according Washington D.C.-based industry group the Mortgage Bankers Association. Mortgage application volume is still down 37 percent year-over-year, according to MBA, but nudged up by 4 percent from a week earlier.
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Real estate brokerage Redfin said its homebuyer demand index — a national measure of requests for home tours and other homebuying services — rose 6 percent from a month earlier in the week ended Jan. 22, though it was still down 29 percent from a year earlier.
In Houston, the number of homes under contract rose by almost 38 percent month-over-month in January, but is still 15 percent less than a year ago, according to HAR data.
With the spring homebuying season around the corner and lower mortgage rates, real estate agents in Houston say they expect the market to stabilize.
“Things have picked up a great deal in Houston since the new year,” said Danielle Smith, a real estate agent in Houston with Orchard. “We have seen buyers starting to adjust to the current mortgage rates, especially as rates have come down slightly, and many have resumed their searches.”
Houston homebuyers can expect to pay more than they would have a year ago, but slowing activity is pumping the brakes on rising home prices. The average price hit $381,983 last month — 1.5 percent higher than a year ago and less than the record $438,302 set in May. Meanwhile, the median home price reached $315,000 in January, about 1.65 percent more than a year earlier, but also lower than its peak of $353,995 in June.
Buyers have a much wider selection of homes to choose from now, too. With a typical home in Houston sitting on the market 20 days longer than it did a year ago, active listings are up 63 percent year-over-year, according to HAR. There are about 2.7 months of supply on the market — meaning if home sales were to continue at their current place, it would take just under three months to sell through all the homes on the market. That is about double the supply there was a year ago.
Buyers are aware of their increased power, with many asking sellers for more concessions, such as paying for closing costs or helping to buy down interest rates, Smith said.
“When interest rates were low and the market was on fire last year, this was less common because we were in multiple offer situations,” Smith said. “Now we’re not in the same market.”
Reporter Katherine Feser contributed.
Source: houstonchronicle.com