After Houston home sales declined in February for the first time since July of 2014, the HAR report for March shows a return to positive territory. March single-family home sales totaled 6,232 units compared to 6,005 in March of 2014. This represents a 3.8 percent year-over-year rise for single-family home sales. These numbers show a bounce back from the drop in February and that has many feeling that the Houston housing market is still very strong.

Ralph Bivins, in an article for Culture Map, claims these numbers are a sign that the Houston market is bulletproof. He cites that single-family home sales are actually slightly up at the end of the first quarter of 2015 compared to single-family home sales through the first three months of 2014. 14,805 single-family homes have been sold through March of this year compared to 14,734 sold through March of 2014. In addition, he points to the 6,004 reported “pending” sales to prove his point.

After February’s sales numbers were released, it seemed that many people overreacted. Seeing as it was the first time single-family home sales had declined in six months, people thought it meant that Houston was finally succumbing to falling oil prices. The market was going to begin a freefall. Now, with a return to the black in March sales numbers, the consensus seems to be that the Houston market is still doing great and February was just a blip on the radar. This too may be an overreaction. In reality, the truth probably lies somewhere in between.

The March increase in single-family home sales represents the market’s fortitude to withstand oil prices that have fallen to around $50 a barrel. The February drop in sales though, shows that the low oil prices will indeed affect the market. Nancy Sarnoff, in an article for the Houston Chronicle, explains, “the collapse in oil prices has forced cutbacks at major oil companies and the Houston economy is facing a much slower year for job growth, which is closely tied to home sales.” Sarnoff also notes that there will be fewer relocation buyers this year because less people will be moving to the city for oil jobs.

In addition to the falling oil prices, the growing Houston housing inventory should slow the city’s housing market. The increase in March sales numbers was very much a result of the increased inventory. There was a 7.3 percent increase in listings in March. With that much growth, the rising sales are not nearly as impressive. All signs point to inventory continuing to rise. Bivins even admits to this. He states that, according to John Burns Consulting, “Houston has been leading the nation in new home construction in recent years.” More inventory will mean more competition for sellers and, resultingly, will likely see the market swing back in the favor of the buyer. That, coupled with less buyers on the market due to slowed job growth should lead to decreasing sales numbers.

None of this is to say that the Houston housing market is in serious trouble. It’s just that the market is coming down from the incredible highs of the past two years. The housing market pendulum had swung way in the favor of sellers in 2013 and 2014, but it appears that it’s starting to swing back the other way. The market is beginning to normalize and should be settling back down closer to the middle. This means that we’re likely headed for a more even market between buyers and sellers.

Looking to buy or sell a home, or just have questions about the market? Always feel free to contact me at cynthia@cynthiamullins.com or 713.829.3052.

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