Emily Pape's Blog

Local REALTORS® Credit Ongoing Effects of Federal Homebuyer Tax Credit

HOUSTON — (June 15, 2010) — May marked the third consecutive month of positive single-family home sales across the greater Houston area, as consumers continued to take advantage of the federal government's homebuyer tax credit. While the credit required homebuyers to have contracts in place by April 30, closings may take place until June 30.

According to the latest monthly data compiled by the Houston Association of REALTORS® (HAR), May sales of single-family homes throughout the Houston market rose 19.1 percent compared to May 2009. That follows increases of 10.8 percent in March and 26.7 percent in April. Sales volume showed increases in all single-family home pricing segments, with the largest hike taking place among homes priced between $80,000 and $150,000.

Pricing leveled off last month. After seven straight months of appreciation, the average price of a single-family home dipped 0.9 percent from May 2009 to $209,920. The May single-family home median price—the figure at which half of the homes sold for more and half sold for less—slid 1.4 percent from one year earlier to $154,780. That followed 12 consecutive monthly increases in median price.

Foreclosure property sales reported in the Multiple Listing Service (MLS) were flat in May compared to one year earlier. The median price of May foreclosure sales rose 3.5 percent to $89,000 on a year-over-year basis.

Sales of all property types in Houston for May totaled 6,659, up 20.3 percent compared to May 2009. Total dollar volume for properties sold during the month was $1.3 billion versus $1.1 billion one year earlier, representing an 18.9 percent increase.

"The homebuyer tax credit was a real shot in the arm for the Houston real estate market, but we are beginning to see sales volume trend toward more seasonal levels now that the incentive has expired," said Margie Dorrance, HAR chair and principal at Keller Williams Realty Metropolitan. "This is still an excellent time to buy a home, as mortgage interest rates are at the lowest levels in more than half a century, and the Houston market in particular offers so many different varieties of properties to meet every consumer's unique needs."

May Monthly Market Comparison
The month of May brought Houston's overall housing market largely positive results when all listing categories are compared to May of 2009. Total property sales and total dollar volume increased on a year-over-year basis while average and median single-family home sales prices showed slight declines.

The number of available properties, or active listings, at the end of May rose 13.0 percent from May 2009 to 51,185. That represents 2,316 more active listings than one month earlier, in April 2010, and reflects additional housing inventory that hit the market as a result of interest in the homebuyer tax credit as well as general confidence in improved market conditions.

Month-end pending sales for May—those listings expected to close within the next 30 days—totaled 2,991, down 17.8 percent from last year. This is likely an indication that the effects of the tax credit are beginning to taper. The months inventory of single-family homes for May stretched slightly to 6.8 months compared to 6.2 months one year earlier, but remains better than the national months inventory of single-family homes of 8.4 months, reported by the National Association of REALTORS® (NAR).

Single-Family Homes Update

May sales of single-family homes in Houston totaled 5,693, up 19.1 percent from May 2009. This marks the third consecutive month of increased sales activity. Broken out by segment, May sales of homes priced from $80,000 and below increased 7.3 percent; those between $80,000 and $150,000 rose by the largest amount of all pricing segments—28.0 percent; those in the $150,000 to $250,000 range climbed 19.2 percent; and those priced between $250,000 and $500,000 were up 13.6 percent. Sales of luxury homes—those priced from $500,000 to the millions—edged up 5.1 percent, a dramatic drop compared to a 53.4 percent increase one month earlier.

Slower sales activity in the high end of the housing market contributed to a slight decline in pricing last month. The average price of single-family homes in May was $209,920, down 0.9 percent compared to one year earlier. That followed seven straight months of appreciated average pricing. At $154,780, the median sales price for single-family homes dipped 1.4 percent versus May 2009, ending a 12-month string of median sales price increases. The national single-family median price reported by NAR is $173,100, illustrating the continued higher value and lower cost of living that consumers enjoy in the Houston market.

HAR also breaks out the sales performance of existing single-family homes throughout the Houston market. In May 2010, existing home sales totaled 4,864, a 23.3 percent increase from May 2009. The average sales price of $196,410 edged up 0.7 percent compared to last year while the median sales price of $145,000 dipped 0.7 percent from its May 2009 level.

Townhouse/Condominium Update
The number of townhouses and condominiums that sold in May jumped 39.7 percent compared to one year earlier. In the greater Houston area, 552 units were sold last month versus 395 properties in May 2009.

The average price rose 3.3 percent to $162,945 from May 2009 to May 2010. The median price of a townhouse/condominium was flat year-over-year at $127,500.

Lease Property Update
Demand for single-family home rentals rose 12.4 percent in May compared to a year earlier. Year-over-year townhouse/condominium rentals increased 23.5 percent.

Houston Real Estate Milestones in May