Houston home sales stumble as housing market continues to cool

(AP Photo/Matt Rourke, File)

Houston home sales stumbled again in September, declining for the sixth consecutive month as the local housing market continues to cool.

The Houston Association of Realtors reports sales were down 17% last month compared to September of 2021. Year-to-date home sales are down 5.1% compared to last year.

Mortgage rates above 6% and home prices in Houston that have stayed fairly high despite the sales slowdown are the biggest factors discouraging potential homebuyers. Many have stayed on the sidelines, hoping rates and prices will drop over the next year.

“I don’t think they’re going to come back down 20% to where they were before the pandemic, but I do think they are going to start to settle a little bit and you might see sellers, after a few weeks on the market, deciding to do those small price reductions,” HAR Chair Jennifer Wauhaub said.

Housing inventory rose to 2.7 months of supply in September – 2.7 months worth of sellable homes currently on the market – which is the highest level since the summer of 2020 and a modest recovery after low inventory over the past few years. That lack of supply and low interest rates during the pandemic led to a record market in Houston. Now, with supply going back up, home prices could slowly go the other way.

“A six-month market is a balanced market. We haven’t been in one of those in a long time,” Wauhaub said. “I think when we start getting up to four or five months of inventory, then that’s when sellers are really going to have to think about how long it’s going to take to get their homes sold. I think we have a way to go before we get there.”

Sales of homes priced between $500,000 and $1 million jumped nearly 13% in September, the only segment that saw growth in sales. Sales of townhomes and condos in Houston fell nearly 18% compared to the same month last year, the fourth consecutive month of declines.

Lenders have become increasingly creative in the face of higher mortgage rates, finding ways to entice potential homebuyers to take the plunge in a turbulent housing market.

“There are companies that are offering to buy-down your rate,” Wauhaub said. “I’ve seen sellers offer to give a contribution to buy-down the buyer’s interest rate to help them when purchasing their home.”

The average price of a home in Houston was $414,776 last month, up almost 12% compared to September of 2021.