HOUSTON-HAR Report — (July 13, 2022) — As summer temperatures soared to record highs in June, Houston’s sizzling housing market began a long-anticipated cooldown. Home sales experienced their first significant decline of 2022, reflecting a perfect storm that had been brewing for months: the combination of diminished inventory, record-high prices and, more recently, rising interest rates on top of a climate of growing inflation. However, the sales slowdown and a steady supply of new listings helped boost inventory to a 2.0-months supply – the most plentiful supply of homes since November 2020.
According to the Houston Association of Realtors’ (HAR) June 2022 Market Update, single-family home sales fell 8.6 percent, marking the third consecutive monthly year-over-year decline with 9,728 units sold compared to 10,649 in June of 2021. On a year-to-date basis, however, the market is still running 1.7 percent ahead of 2021’s record-setting volume.
Once again, the $500,000 to $1 million housing segment drew the highest sales volume of the month, registering a 22.0 percent year-over-year sales volume gain. That was followed by homes priced from $250,000 to $500,000, which rose 2.4 percent. The luxury segment – consisting of homes priced at $1 million and above – saw its first decline in two years, slipping 2.3 percent.
A continued lack of homes priced below $250,000 left consumers no choice but to weigh more expensive property options, shift their focus to rental homes or postpone any plans to buy or rent. [HAR’s Monthly Rental Home Update for June will be released next Wednesday, July 20]. Some relief came after the June home sales numbers were tallied. During the first week of July, mortgage rates finally reversed course, with Freddie Mac reporting that the average interest rate on a 30-year fixed-rate loan fell from 5.7 to 5.3 percent – the biggest decline since 2008.
However, an average rate of 5.3 percent is well above the average rate of 2.67% on 30-year fixed-rate loans that prevailed in December 2020. It is still higher than rates have been over the course of most of the past decade.