As the spring buying season crept up in the Lone Star State, April flowers failed to bloom in Houston. Inventory is overflowing in the Bayou City’s real estate market; meanwhile, prices remain relatively high, according to the Houston Association of Realtors.
While new listings were down more than 8 percent in April, year-over-year, the city’s available properties shot up nearly 63 percent. When homes come onto the market in Houston, they are increasingly staying there. Median days on market have increased 67 percent from 20 days to 33 year-over-year, according to Redfin.
Would-be homebuyers are pulling back, reports from HAR suggest. Sales volume in the Bayou City has been on a steady decline since last summer, prior to the winter seasonal decline.
Meanwhile, Houston’s penchant for affordability is becoming a thing of the past. While it has been largely inoculated from the price increases that hit other markets, the average list price is creeping toward record highs. April logged an average listing price of $432,000, inching closer to record-setting $441,000 average in May 2022.
“I think rising interest rates are going to be a continual concern for buyers moving in, even into the summer months, but I think we’re going to have a strong summer,” said Cathy Trevino, HAR chair. “It’s kind of hard to tell. I wish we had a crystal ball. We’ve heard from many economists that toward the end of the year interest rates may go down. So, we do have a lot of buyers that are on the fence, who are then turning more towards rental, which is definitely peaking as well.”
On May 3, the Federal Reserve increased its key interest rates to 5.25 percent, its 10th hike in 14 months and the highest rate logged in 16 years. About 78 percent of homebuyers finance their homes, namely 30-year, fixed-rate mortgages, which will be the primary loan type affected by the interest rate hikes, according to the National Association of Realtors.
Interest rates have been of primary concern to homebuyers. A would-be homeowner in 2023 with a 5.25 percent interest rate on a $432,000 home could be expected to pay an average of $810 more per month than an interest rate of 3 percent less than two years ago.
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