April prices rise as fewer homes sell

Home prices in Houston rose again in April, although fewer homes were sold amid tight inventory and rising mortgage rates.

Average home prices climbed 14.9% in April to $426,061 – marking the second month in a row that average prices topped the $400,000 mark, according to the Houston Association of Realtors. Median home prices jumped nearly 17% over the year to $343,000, according to HAR.

The pace of home sales has slowed, however. Sales volume was essentially flat compared to a year ago – the first time in 2022 it did not exceed last year’s records, according to HAR. Pending sales, or homes under contract, fell 1.2% in April from a year ago.

More sellers put their homes on the market in April, but strong demand is keeping inventories extremely tight at 1.4 months of supply, meaning it would take around a month and a half to sell all the homes on the market. market at the current rate of sales. (A balanced market between sellers and buyers has 6 months of supply.) The average home stays on the market for 33 days in Houston, up from 40 days a year ago, according to HAR.

“Contrary to what some people think, we do have new listings on the market, but they are selling out exceptionally quickly and at some of the highest prices ever, as buyers and investors bid for cash. well above the asking price to beat their competition,” said Jennifer Wauhob, president of the Houston Association of Realtors and Better Homes and Gardens Real Estate agent Gary Greene.

On average, the majority of homebuyers are paying slightly above asking price, according to HAR, although some experts say bidding wars in some neighborhoods are pushing selling prices significantly above asking prices.

Anne Park, Douglas Elliman’s associate real estate agent in Houston, said it’s common for buyers to pay 10-15% above asking price, especially in hot markets such as Pearland, Sugar Land and Katy, where bidding wars are common.

“What I see is that because interest rates are going up, they want to buy something right now,” Park said. “But the problem is that properties (in some areas) have so many multiple offers that they have to add more money to offer,”

Rising prices come on top of a worsening affordability shortage due to rising mortgage rates. The average rate for a 30-year fixed mortgage is hovering around 5.27%, more than 2 percentage points higher than the rate of 2.96% a year ago, according to Freddie Mac, the government sponsored mortgage financing. That could add about $435 to the potential buyer’s monthly payment (excluding insurance and taxes) assuming they take out a $320,000 loan.

Mortgage rates are relatively low compared to the 1980s and 1990s, but after historically low rates during the pandemic, the rapid increase is shocking potential buyers.

“Typically there’s a newly instilled sense of urgency to do something and so we usually see a group of people rushing into the market as rates go up,” said Chance Brown, broker/owner at CB&A Realtors. . which has 510 real estate agents in Texas. “And then you start to see a lull after the first initial wave.”

Brown said his agents are still seeing bidding wars across Houston as demand remains strong. For example, a three-bedroom house in Tomball received 92 offers within 48 hours, Brown said.

But there, some buyers, tired of outbidding, are choosing to wait for rapid price appreciation, Brown said. Other shoppers are simply realigning their expectations rather than foregoing purchases.

“People are being sold homes they could have afforded four months ago now, and they have to look for cheaper homes elsewhere if they’re on a tight budget,” Compass chief executive Seita Jongebloed told Houston.

Additionally, Jongebloed noted, rising costs could force potential buyers to stay in the rental market which is “on fire right now.”

Rental volume among single-family rentals rose 17.2%, with average rents climbing 10.2% to $2,164, according to HAR. Median apartment rents in Houston rose 11.1% to $1,221 for a two-bedroom apartment, according to data from ApartmentList.com, an online apartment listing service.

Camden Property Trust, a Houston company that owns and manages about 58,000 apartments nationwide, said last month that fewer of its tenants were moving out of its apartments after buying a home. it is starting to see fewer moves for home purchases in its national apartment portfolio of 58,000 units. About 14% of renters who moved moved because of a home purchase in the first quarter, up from about 17% of moves a year ago, according to Camden’s SEC filings.


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