Consumers drive home sales volume and home prices to all-time highs and inventory to an all-time low
The year 2014 enters the history books as a year of extremes for the Houston housing market, as home sales volume and prices achieved record highs while inventory levels tumbled to record lows.
The frenzied real estate activity was primarily driven by the addition of more than 125,000 jobs that attracted buyers and renters from across the U.S. and around the world between November 2013 and November 2014, according to the Texas Workforce Commission.
December single-family home sales increased 11.6 percent versus December 2013 while total property sales rose 11.0 percent. The latest monthly report prepared by the Houston Association of REALTORS® (HAR) shows that contracts closed on 6,451 single-family homes, shrinking inventory to a 2.5-months supply, the lowest level of all time. Once again, homes from $250,000 and above registered the highest sales volume and accounted for the latest round of price appreciation.
“The Houston housing market experienced its best year on record in 2014 and that is a reflection of the vitality of the local economy,” said HAR Chair Nancy Furst with Berkshire Hathaway HomeServices Anderson Properties. “We expect the pace of sales to normalize this year, which should finally enable inventory levels to grow, restoring balance to the market.”
The single-family home average price rose 6.6 percent year-over-year to $280,863 while the median price—the figure at which half of the homes sold for more and half sold for less—rose 11.2 percent to $209,590. Both figures represent historic highs for a December in Houston, however they did not top the all-time record prices (average of $284,569 and median of $215,000) reached in June 2014.
December sales of all property types in Houston totaled 7,695, an 11.0 percent increase over the same month last year. Total dollar volume for properties sold in December soared 18.1 percent to $2.0 billion versus $1.8 billion a year earlier.
2014 Annual Market Comparison
2014 was a record year for the Houston housing market, with strong gains recorded in sales volume and pricing versus 2013. There were 75,319 single-family closings and 91,202 total closings, representing the most transactions in the history of Houston real estate. Months inventory began the year at a 2.6-months supply, and while it crept up to a 3.0-months supply over the summer, it ended the year at a record low 2.5-months supply. Months inventory estimates the number of months it will take to deplete current active inventory based on the prior 12 months sales activity.
The greatest one-month sales volume of 2014 was recorded in July, with 7,613 single-family closings. By contrast, the lightest one-month sales volume took place in January, with 3,930 closings. The biggest year-over-year sales jump took place in December.
Single-family home sales rose 2.8 percent for the year and sales of all property types increased 3.5 percent. On a year-to-date basis, the average price climbed 8.7 percent to $270,182 while the median price increased 10.6 percent to $199,000. Total dollar volume for full-year 2014 reached a record high, up 12.7 percent to nearly $24 billion compared to around $21 billion in full-year 2013.
December Monthly Market Comparison
December delivered positive results across all sales categories compared to December 2013. On a year-over-year basis, total property sales, total dollar volume and average and median pricing all rose.
Month-end pending sales for all property types totaled 3,414. That is up 9.4 percent compared to last year and suggests another possible increase when the January sales numbers are crunched. Active listings, or the number of available properties, at the end of December declined 8.3 percent from December 2013 to 25,821.
Housing inventory in Houston has been below a four-month supply since November 2012. It first fell below a three-month supply in November 2013, and reached a record low 2.5-months supply in December 2014. Inventory consisting of a 6.0-month supply is typically regarded as constituting a balanced real estate market. For perspective, the national inventory of single-family homes is 5.1 months of supply, according to the National Association of REALTORS® (NAR).
Single-Family Homes Update
December sales of single-family homes in Houston totaled 6,451, up 11.6 percent from December 2013. Broken out by housing segment, December sales performed as follows:
- $1 – $79,999: decreased 19.8 percent
- $80,000 – $149,999: decreased 8.1 percent
- $150,000 – $249,999: increased 19.4 percent
- $250,000 – $499,999: increased 26.1 percent
- $500,000 – $1 million and above: increased 20.4 percent
The average price of a single-family home rose 6.6 percent from last year to $280,863, the highest level ever for a December in Houston. At $209,590, the median sales price for single-family homes also achieved an historic high for December, up 11.2 percent year-over-year.
HAR also breaks out the sales performance of existing single-family homes throughout the Houston market. In December 2014, existing home sales totaled 5,384, a 13.4 percent increase from the same month last year. The average sales price rose 2.7 percent year-over-year to $253,108. The median sales price shot up 11.8 percent to $190,000.
Townhouse/Condominium Update
December sales of townhouses and condominiums rose 7.3 percent from one year earlier. A total of 556 units sold last month versus 518 properties in December 2013. The average price increased 10.1 percent to $231,561 while the median price rose 1.8 percent to $158,000. Months supply of inventory fell to 2.3 months compared to 2.6 months in December 2013.
Lease Property Update
December demand for lease properties was strong. Rentals of single-family homes jumped 11.7 percent compared to December 2013, while year-over-year townhouse/condominium rentals increased 11.5 percent. The average rent among single-family lease homes rose 5.0 percent to $1,699. The December average rent for a townhouse/condominium rose 2.4 percent to $1,507 per month.
Houston Real Estate Milestones in December
- 2014 was a record year for the Houston real estate market, with December marking the greatest one-month gain in sales volume (11.6 percent);
- Single-family home sales increased 11.6 percent year-over-year;
- Total property sales rose 11.0 percent to 7,695;
- Total dollar volume jumped 18.1 percent, increasing from $1.8 billion to $2.0 billion on a year-over-year basis;
- At $280,863, the single-family home average price reached the highest level for a December in Houston;
- At $209,590, the single-family home median price also reached a December high;
- A 2.5-months supply of inventory of single-family homes is the lowest level of all time and is well below the national average of 5.1 months;
- Sales of townhouses/condominiums rose 7.3 percent year-over-year;
- Single-family home rentals rose 11.7 percent compared to December 2013 while rentals of townhouses/condominiums climbed 11.5 percent.
