Houston Housing Market

The total housing inventory for the Houston housing market fell once again in October.  Down from 6.6 months in September to 6.5 months for the month of October, which corresponds to a drop in active listings of just over 1,000 single family housing units.  Despite this drop in housing inventory it looks to me as we will likely see the first drop in the Houston metro areas average home sale price in October.  Once the complete set of Houston housing market numbers are released, sometime around the middle of this month, I expect that we will see a drop in the average home sale price of less than 1%. This would be the first month of 2008 where we did not see a rise in average home sale price.  This may be a sign of the difficulties in obtaining financing in the higher price ranges, or it could be the early signs of the flattening of Houston home price appreciation.

Total Breakdown of Activity For The Houston Housing Market

I have decided to add a couple of price point brackets for us to follow.  These new price ranges will include the 300,000-700,000 price range and the 700,000 and above price point.  My reason for adding these price ranges to our monthly report is that I expect we will see a weakening in the 300,000-700,000 price point that may not exist in the 700,000 price point.  I also thought it would be useful to see how healthy the 700,000 and above price range looked.  To retain some standardization throughout future months, we will still look at the aggregate of these two price points in the same manner we have been since the inception of the report.  

 The 80,000 and below price point returned to its 5 months of inventory seen in the report for August, which is down from the 5.1 months of inventory we noted in September.  What once was the weakest and most unstable price point in the Houston housing market has now shown significant movements to stability.  The 80,000 to 150,000 price point has now dropped below the 6 month point with 5.9 months of housing inventory.  Most economists would agree that a housing market with less than 6 months is healthy and would be noted as a neutral market rather than a buyer’s or seller’s market.  The total Houston housing inventory in the 150,000 to 300,000 price point fell from 6.3 months of inventory in September to 6.2 months for October.  Housing inventory levels for the 300,000 and above price point held steady at 9.2 months of inventory.  The first of our new price points, the 300,000-700,000 price range, came in at 8.2 months which by most would be considered a buyer’s market but still not in danger of seeing price declines.  The 700,000 and above price range showed housing inventory levels of 13.9 months which is in excess of what would be deemed healthy for that price range.  The 12 month price point is the break point of what is considered healthy for the luxury market.

Houston Homes Market Breakdown For 80,000 And Below

Houston Homes Market Breakdown For 80,000-150,000 Price Range

Houston Homes Market Breakdown For 150,000-300,000 Price Range

Houston Homes Market Breakdown For 300,000 And Above

Houston Homes Market Breakdown For 300,000-700,000 Price Range

Houston Homes Market Breakdown For 700,000 And Above

The October housing inventory numbers tell a different story than what was the case early in the year.  It had been the case that the under 300,000 price range in the Houston housing market was having struggles due to a high number of foreclosures.  This was especially the case for the 80,000-150,000 price range.  In the beginning of the year, the above 300,000 price point was very strong and driving the market forward.  After analyzing this month’s numbers, it looks as though the Houston housing market has made a 180 degree turn.  The 300,000 and below price points are showing increased stability and strength despite the credit freeze markets have been experiencing, which is likely due to the added security of FHA loans for lenders.  I am assuming that lenders have not reduced the number of loan originations done through FHA program, but rather, they have become highly weary of making loans that do not receive federal insurance against loss.  It will be interesting to see if these trends continue in the months ahead.

Information contained in this post was acquired from the Houston Association of Realtors via the multiple listing service database and archive.  Data should be considered reliable, but is not guaranteed to be accurate.

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This entry was posted on Monday, November 3rd, 2008 at 11:33 pm and is filed under Houston Housing Market. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.