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Real Estate

The confidence of the Houston market is beginning to build steam, according to a recent report by Metrostudy, a national housing data and consulting firm that maintains the most extensive primary database on residential construction in the US housing market.

Houston's unemployment rate dropped to 7.6%, a full percentage point less than the 3Q11 reading. Employment also grew by 3.3% annually. “Behind a surging Energy industry, a strong health care sector and recovering manufacturing and retail industries, six of Houston's 16 employment sectors have added more than 10,000 jobs in the last 12 months,” said David Jarvis, director of Metrostudy’s Houston division.

Houston homebuilders started 18,417 new homes in 2011, a 2% decline from the 2010 total. But the 4,387 homes started in 4Q11 represent a 24% increase from last year’s tax credit-depressed quarterly starts count. 4,892 new homes were closed in 4Q11, 388 more than 4Q10.

At the end of 2011, the Houston new home market held an inventory lower than 10,000 homes for the first time since 1997. A 10% decline in new home closings in 2011 resulted in the months of supply of new homes to rise to 6.4 months, above last year’s 5.9 months. “Regardless, builders should be forced to start more homes in 2012 in order to keep pace with the growing demand brought on by the health of the Houston economy,” said Jarvis.

Jarvis continues,"The building blocks for strong economic fundamentals continue to stack up in favor of the Houston market, but the headwinds of 2011 persist as 2012 begins. But based on the job growth of the last 12 months, the tight housing supply and the building confidence of the Houston market should lead to an increase in new home starts through the end of 2012."

Market Highlights – May 2012:
  • • According to HAR, in May 2012 Houston home sales reached highest point in four years.
  • • May sales of single-family homes soared 24% compared to May of 2011. That marks the biggest monthly increase since August 2011.
  • • May sales account for the 12th consecutive month of positive sales.
  • • 6,185 single-family homes sold in May.
  • • May 2012 sales were the highest since June 2008 (6,269 sales).
  • • Total dollar volume for properties sold during May jumped 35.4% to $1.6 billion versus $1.2 billion a year earlier.
  • • The upper end of the Houston housing market reported exceedingly strong sales. John Daugherty Realtors, a leader in selling homes to the city’s affluent, has reported record-setting sales for the company this spring. The sales of homes priced at $500,000 and up increased a phenomenal 42.3% over May of last year, the Realtors association reported.
  • • Home price statistics jumped in May. The average price of a Houston house sold in May was $237,083 – the highest average home sales price ever recorded.
  • • At $168,000, up 7% from May 2011, the single-family home median price also hit the highest level ever seen in Houston. The median price is the midpoint, indicating half the homes sold for more and half for less.
  • • Local housing inventory is now at its lowest level in more than five years. At the end of May, inventory of homes for sale totaled 42,280 properties, an 18.1% decrease from May 2011. The tighter inventory pushed prices upward.
  • • Condo and townhome sales were up 31% over May of last year. And for renters, single-family home leasing was up 15% last month.
Contributing factors to home sales growth – May 2012:
  • • Low interest rates, with 30-year mortgages around 4%
  • • Strong local economy
  • • Houston has been among the national leaders for job growth for some time – i.e. Exxon Mobil recently announced that it is relocating 2,000 employees to Houston from Virginia.