HOUSTON/HAR Report — (January 11, 2023) — Despite charging through a pandemic with no let-up in sales, Houston real estate could not withstand the powerful economic headwinds that began swirling in 2022 and ultimately ended a long and much-admired record-setting run. On top of limited affordable housing inventory, mortgage rates were perhaps the biggest culprit, rising throughout most of the year as the Federal Reserve drove a steady campaign of interest rate hikes to tame soaring inflation. The move prompted many consumers to postpone homebuying plans – in many cases diverting to the rental market which thrived as a result. While mortgage rates have fallen steadily since surpassing seven percent in November, home sales continue to slow and will likely remain down through at least the early part of 2023.
Single-family home sales for 2022 were down almost 11 percent compared to 2021’s record pace, marking the first year that Houston housing has been in the red since 2015. Despite the sales slowdown, prices rising to new highs in the $400,000s kept 2022’s total dollar volume close to last year’s record level.