May has come and gone, but record breaking Houston home prices have remained. HAR released their report for the month of May and, after reaching new heights for average and median single-family home prices for an April, prices only continued to climb in May. May prices weren’t just the highest ever for a Houston May, but the highest for any month in the city’s history. While home prices continued to ascend, home sales actually took a step back. This likely is a reflection of rising housing inventory levels which reached their highest point since October 2013.

The average price of single-family homes in May was up 4.5 percent year-over-year. That meant a new all-time Houston record of $292,040 compared to $279,422 in May 2014. Median prices also set a Houston record with an even more impressive year-over-year increase. The median price in May 2014 was just over $200,000. By reaching $223,000 this May, the median price had risen 10.5 percent!

These record home prices did not, however, mean an increase for the number of homes sold. Instead, May saw a 4.3 percent year-over-year decrease in the number of single-family home sales from 7,110 to 6,807. Single-family homes pending sales at month’s end also dropped, from 8,378 in May 2014 to 8,127 this May. That represents a 3 percent decrease.

Despite the low home sales numbers, the total dollar volume for May 2015 remained almost completely the same as it was a year earlier. This was obviously due to the historic home prices. The healthy increase in sales for homes priced between $250,000 and $500,000 was the biggest reason for this. Sales for homes priced between $150,000 and $250,000 were flat while lower-priced home sales declined. The positive sales activity for homes between $250,000 and $500,000 was enough though, to keep the total dollar volume steady.

The decrease in homes sold is presumably a result of Houston’s increasing housing inventory levels. Months of inventory, or the amount of time it would take to sell all the houses on the market, based on recent sales, has continued to rise since January. In May, the months of inventory jumped to 3.1 which not only represents a 9.1 percent increase over May 2014, but also is the highest the city has seen since October of 2013.

While Houston’s housing inventory has steadily risen throughout the year, home sales thus far in 2015 have been largely inconsistent. It has been a bit of a rollercoaster ride. This is why a drop in sales in May after an increase in April should not be much of a surprise. The market is normalizing after the incredible highs of the past two years. The sales numbers have not been taking a direct route to reach this normal housing state though. Instead, we’ve seen a lot of ups and downs as the market begins to settle in. May sales numbers were down, but June numbers could very possibly be positive again. HAR Chair Nancy Furst likens the market to the final approach on an airplane. “We are on our way to a more normalized housing market after a record-setting 2014, and just like an airplane coming in for a landing, passengers are told to expect the possibility of some dips and bumps on approach.”

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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