For the first half of 2017 the Houston market has set new and record setting sales numbers. The heights of these numbers are unprecedented. “Numbers such as these get everyone’s attention, home buyers and real estate investors alike,” stated Raymond Campbell of Houston Home Buyers.
Let’s take a look at these “smoking hot” numbers. In June 2017 there were a total of 8,414 single family homes sold in the Houston area. That compares to a year ago number of 7,771 which represents an 8.3% increase. The June 2017 number of 8,414 is also the largest monthly sales number in history. Overall, the June mid-year sales numbers are 7.4% greater than the first six months of 2016.
The fly in the celebration cake is Inventory Level. This is an estimate, based on the prior 12 months of sales statistics, of the number of months that are required to sell the current inventory of homes for sale. The June 30 inventory level of supply was 4.4 months, which is the highest inventory number in almost five years. Moreover, this number has risen significantly in the past 3 months. On May 31 the inventory level was 3.9 months. Therefore the latest one month increase in inventory was 12.8%.
“These recent inventory numbers have created some concern in the Houston real estate community,” commented Mr. Campbell, “and most of us are not sure what it suggests. It could be a statistical aberration, or perhaps homeowners and real estate investors are simply putting their homes on the market now because they all know this is the busy season.” Others are voicing concern and suggesting that the Houston market may be at or near a top and needs time to “catch its breath.”
“However, if you did a little deeper into the statistics you might get a clearer picture. Yes, the inventory level is higher but it is an estimate based on the prior 12 months of sales. The monthly average of the prior 12 months of sales was lower than in this past month, June 2017. So if we continue to see an increase in sales volume in July, August, and beyond then we should see the market absorb the increased inventory without much problem. Even if sales stagnate in the next three months we are still at record levels of sales and can absorb the inventory. I think the key is to watch the inventory levels over the next 2 or 3 months. If it continues to increase 5% or 10% monthly then Houston may have a problem,” stated Mr. Campbell.
The Houston area single family home median price of $239,023 was also a new record set on June 30, 2017. It is a further indication that the Houston market is extremely active. Further bolstering the hot Houston market are the statistics for single family pending sales. The June 30, 2017 figure is 8,363 homes which is an 18.9% increase over the June 30, 2016 figure.