Houston area home prices still outpace last year while setting historic highs for a May in Houston
HOUSTON — (June 21, 2011) — The 2010 home buyer tax credit continues to obscure an accurate gauge of how the Houston real estate market is performing. The 2010 federal incentive triggered a short-term surge in local home sales last spring that has skewed the year-over-year analysis most of this year.
When compared to the tax credit incentivized closed sales of May 2010, there were fewer home sales recorded in May 2011, according to the Multiple Listing Service (MLS) report prepared by the Houston Association of REALTORS® (HAR). At the same time, the number of listings that went under contract this May and expected to close in the next 30 to 60 days was up more than 35 percent when compared to May 2010—yet another comparison that is skewed by the tax credit that required buyers to enter purchase contracts by the April 30, 2010 deadline.
"Getting an accurate read on the Houston real estate market remains challenging because the 2010 tax credit prompted a surge in home sales during the first half of last year that otherwise would have occurred throughout the summer," said Carlos P. Bujosa, HAR chairman and VP at Transwestern.
The average price of a single-family home jumped 6.5 percent from May 2010 to $220,210. The May single-family home median price—the figure at which half of the homes sold for more and half sold for less—climbed 3.2 percent year-over-year to $157,900. Both the average and median price reached the highest levels for a May in Houston as well as for 2011.
Volume continued to soar among rental properties, confirming reports that while many new residents may be moving to the greater Houston area, they are as yet unable or unwilling to buy a home possibly due to more stringent mortgage lending requirements, an inability to sell the homes they've left behind, or a combination of these or other factors.
According to the latest HAR report, May single-family home sales fell 11.9 percent versus one year earlier. However, the 5,043 single-family homes that did sell represent the highest monthly volume recorded since June 2010, just after the tax credit expired. The under-$80,000 and above-$500,000 segments of the market experienced increased sales last month.
Foreclosure property sales reported in the MLS decreased 3.0 percent in May compared to one year earlier. Foreclosures comprised 19.8 percent of all property sales, down from 22.0 percent in April and 23.5 percent in March. The median price of May foreclosures fell 11.2 percent to $79,000 on a year-over-year basis.
May sales of all property types in Houston totaled 5,948, down 11.2 percent compared to May 2010. Total dollar volume for properties sold during the month declined 6.7 percent to $1.2 billion versus $1.3 billion one year earlier.
The month of May brought Houston's overall housing market mixed results when all listing categories are compared to May of 2010. Total property sales and total dollar volume declined on a year-over-year basis while both average and median prices increased to the highest levels for a May in Houston.
Month-end pending sales for May totaled 4,049, up 35.4 percent from last year. While a rise in pendings typically portends higher demand in the following month's sales, the May report is seen more as a reflection of the rapid pace at which 2010 sales went under contract in advance of the tax credit closing deadline. Pendings are therefore expected to remain high as long as the distortive effects of the tax credit linger.
The number of available properties, or active listings, at the end of May edged up 0.9 percent from May 2010 to 51,652. The inventory of single-family homes rose to 8.0 months compared to 6.8 months one year earlier. That means that it would take 8.0 months to sell all the single-family homes on the market based on sales activity over the past year. The figure still compares favorably to the national inventory of single-family homes of 9.2 months reported by the National Association of REALTORS® (NAR). Local months inventory rose from 7.0 months to 8.4 months in the 12-month period following the expiration of the tax credit.