May Housing Report

Updates on the Houston Housing market in May 2022.

By: Peyton Poynter

May 26, 2022

Houston, Tx

Home Sales

April sales came in as expected but show signs that the federal reserve’s rate increases may be causing prices to drop faster than expected. Overall Single Family sales dropped from March to April from 9,693 units to 9,079 units sold, but the average price of homes rose to $426,061 with the closing price/List Price at 100.6 percent showing that buyers, on average, were still paying more than list price.

What does this mean?

On the face, an increase in average prices sold would mean high demand markets. This average price does seem to be propped up by the fact that there are virtually no homes for sale below $250,000 because they have all been picked up by investors and institutional cash buyers due to the buy to rent market.

Cracks beginning to show (But holding up)

Listings have begun to tick up to 1.4 months inventory and 22,475 active listings from 1.3 months and 20,923 active listings in March. Both Sellers and Buyers seem to be “rushing for the exit” as they try to buy & sell homes while interest rates are still relatively low.

The lower days’ on market also backs up the narrative that there was still a high demand from buyers as they scramble to close on homes within the 60 day lock period on mortgage pre-approvals.

The Rise of Renters

In the rental market, Single Family rentals spiked increasing by 17.2% with the average rent up by 10.2% year over year showing that buyers who have not found any homes have decided to rent as rates rise and create affordability issues.

As you can see in the chart below, the average monthly payment based on Fannie Mae Rates and the average price of homes has begun to diverge from rental rates this year quite dramatically with Monthly Total Payments (20% Down) for a 30 year mortgage reaching $2,726 per month compared to Single Family Rentals at $2,164 per month. This spread in monthly costs seems to be causing a wave of buyers and sellers to act now ahead of what could be perceived as an upcoming recessionary downturn with those who can’t afford to buy moving into the single-family rental market.

What it means going forward

Signs of cracks are starting to show and you can expect a stronger increase in the supply of listings to begin to hitting the market as seller’s continue to try and sell at current prices. You can also expect a slower, but still high sales volume as any leftover buyers who have locked in rates to continue to try and buy homes. The rental market should also continue to remain robust with average rents rising rapidly and a low inventory of listings available as buyers turn into renters throughout the summer season.

We expect this to be a short term reaction that will begin to abate over the next 3-4 months with buyer demand dropping off and the supply of homes steadily picking up through the remainder of the year causing downward price pressures among the market slowdown.

Need help understanding the market?

Interested in getting a professional opinion on what you should do with your properties? Reach out to us today at parceto.com or give us a call at (832) 324-5754 and we can consult with you on today’s best strategies, insights, and trends to help you outperform the market!

The information and details contained herein have been obtained from third-party sources believed to be reliable, however, Parceto Real Estate has not independently verified its accuracy. Parceto Real Estate, it’s owners, stakeholders, and employees make no representations, guarantees, or express or implied warranties of any kind regarding the accuracy or completeness of information and details provided herein, including, but not limited to, the implied warranty of suitability and fitness for a particular purpose. Interested parties should perform their own due diligence regarding the accuracy of the information.

Any information provided herein, is being provided subject to errors, omissions, changes of price or conditions, and withdrawal without notice. Third-party data sources used in this article include: The Houston Association of Realtors and Freddie Mac. All content is provided on an “as is” basis, with no warranties of any kind whatsoever.

You should always consult with the assistance of an appropriate professional before making any decision. Opinions, estimates, forecasts, or other views contained in this document are those of Parceto Real Estate, and no information referenced in the article should be considered investment advice.

Online Information Sources:

Freddie Mac, “Mortgage Rates.” Freddiemac.com, 26 May 2022, https://www.freddiemac.com/pmms

Houston Association of Realtors, “MLS Press Release: Houston Home Sales Remain Strong in April as Prices Soar.” Har.com, 11 May 2022, https://www.har.com/content/mls/?m=04&y=22

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