Sales of high-end homes explode while a severe lack of inventory leaves consumers little to buy in the sub-$250K market
A shortage of available homes priced at $250,000 and below combined with frenzied shopping among high-end homes produced a surge in pricing when compared to a Houston housing market in the grips of a pandemic-related lockdown a year earlier, in March 2020. Record low interest rates continued to fuel the buying bonanza.
According to the latest Houston Association of Realtors® (HAR) Market Update, single-family homes sales jumped 24.4 percent in March with 9,347 units sold versus 7,511 a year earlier. That marks the tenth straight positive month of sales. On a year-to-date basis, homes sales are running 16.9 percent ahead of 2020’s record pace.
Homes priced between $500,000 and $750,000 led the way in sales volume in March with a 96.8 percent year-over-year surge. That was followed by the luxury segment ($750,000 and above), which soared 89.9 percent. With high-end home shopping dominating the market, pricing was pushed to historic highs. The single-family home average price climbed 19.9 percent to $370,847 and the median price increased 16.0 percent to $290,000.
Sales of all property types totaled 11,692 – up 31.5 percent from March 2020. Total dollar volume for the month shot up 55.8 percent to $4.0 billion.
“Several overlapping market forces propelled us to a strong finish in March, between a lack of low-to-mid-range housing and aggressive high-end buying by consumers taking advantage of historically low interest rates,” said HAR Chairman Richard Miranda with Keller Williams Platinum. “The inventory shortage is causing stress for many folks. Hopefully we begin to see an uptick in new listings sooner than later.”
According to the “Housing Investor Mania 2.0” report from John Burns Real Estate Consulting, 24 percent of all homes recently purchased in the Houston market were bought by investors.
Lease Property Update
Lease properties registered a mixed performance in March. Single-family lease homes fell 17.9 percent year-over-year while leases of townhomes and condominiums rose 5.7 percent. The average rent for single-family homes increased 8.8 percent to $1,944 while the average rent for townhomes and condominiums rose 6.8 percent to $1,720.
March Monthly Market Comparison
With frenzied buying at the high end and shrinking inventory in the mid-to-low end, the Houston real estate market managed to achieve its tenth straight month of positive sales in March, with some of the data distorted because it compares to March of 2020 when very little business took place as a result of COVID-19 lockdowns.
The monthly sales readings were mostly positive. Single-family home sales, total property sales and total dollar volume all rose compared to March 2020. Pending sales shot up 61.1 percent. However, total active listings – or the total number of available properties – fell 43.2 percent as fewer new listings came onto the market.
A 5.8 percent year-over-year decline in new listings combined with another strong month of sales drove single-family homes inventory down to a 1.4-months supply compared to 3.4 months a year earlier. That is the lowest inventory level of all time. Housing inventory nationally stands at a 2.0-months supply, according to the National Association of Realtors (NAR).
Single-Family Homes Update
Single-family home sales rose 24.4 percent in March with 9,347 units sold across the greater Houston area compared to 7,511 a year earlier. Strong sales volume among homes at the high end of the market pushed pricing to record highs. The single-family home average price climbed 19.9 percent to $370,847 while the median price rose 16.0 percent to $290,000.
Selling a home took significantly less time than it did a year ago. Days on Market (DOM) fell from 65 to 45. With fewer new listings entering the market, inventory registered a record low 1.4-months supply compared to 3.4 months a year earlier. That figure is slightly below the current national inventory level of 2.0 months recently reported by NAR.
Broken out by housing segment, March sales performed as follows:
- $1 – $99,999: decreased 25.9 percent
- $100,000 – $149,999: decreased 31.7 percent
- $150,000 – $249,999: decreased 7.8 percent
- $250,000 – $499,999: increased 50.7 percent
- $500,000 – $749,999: increased 96.8 percent
- $750,000 and above: increased 89.9 percent
HAR also breaks out sales figures for existing single-family homes. Existing home sales totaled 7,463 in March, up 29.1 percent compared to the same month last year. The average sales price jumped 21.4 percent to $364,037 while the median sales price climbed 21.2 percent to $285,000.
Townhouse/Condominium Update
Sales of townhouses and condominiums increased for the seventh straight month in March, rocketing 45.2 percent with 790 closed sales versus 544 a year earlier. The average price increased 7.6 percent to $242,063 and the median price rose 5.3 percent to $195,000. Inventory fell from a 4.2-months supply to 2.9 months.
Houston Real Estate Highlights in March
- Single-family home sales increased for the tenth consecutive month, up 24.4 percent year-over-year with 9,347 units sold;
- The Days on Market (DOM) figure for single-family homes dropped from 65 to 45;
- Total property sales shot up 31.5 percent with 11,692 units sold;
- Total dollar volume soared 55.8 percent to $4.0 billion;
- The single-family average price reached a record high, rising 19.9 percent to $370,847;
- The single-family median price climbed 16.0 percent to $290,000 – also a record high;
- Single-family homes months of inventory registered an historic low 1.4-months supply, down from 3.4 months year-over-year and below the national inventory of 2.0 months;
- On a year-to-date basis, single-family homes sales are running 16.9 percent ahead of 2020’s record pace.
- Townhome/condominium sales jumped 45.2 percent with the average price up 7.6 percent to $242,063 and the median price up 5.3 percent to $195,000;
- Single-family home rentals fell 17.9 percent with the average rent up 8.8 percent to $1,944;
- Townhome/condominium leases rose 5.7 percent with the average rent up 6.8 percent to $1,720.
