Is Houston Housing Market Boom Finally Ending?
For the first time in more than three years, Houston home sales fell last month, a possible sign that the area housing market’s heady days may be coming to an end.
Single-family home sales dropped 8.8 percent in March from the same month in 2006, according to the Houston Association of Realtors.
During the month, Realtors sold 6,004 single-family homes through in the Houston housing market, which includes mostly existing and some new homes in the city of Houston and its surrounding counties.
A possible explanation for the drop was that sales in March 2006 were unusually high, posting a remarkable 22.7 percent gain over the previous year.
Meanwhile, the median price for single-family homes rose 5 percent last month to $150,590. The association said it will closely monitor sales activity in the coming months, but for now, it’s not overly concerned.
“One month is not a trend,” said Rob Cook, the group’s chairman, adding that sales are still up 6 percent over the last 12 months. “It may be an aberrant situation.”
That was the case in January 2004, the last time home sales fell. During that month, sales declined by less than 1 percent and were flanked by two strong months of increases, powered by low Texas home loan costs.
Some believe that at least part of the reason for the slowing home sales this year may be a result of psychological effects over a national slowdown.
Recent headlines on increased foreclosures, builder cutbacks and a fallout in the bad credit mortgage lending sector are making people leery about entering the housing market.
Still, rising defaults have led some lenders to put higher standards on the home loans they issue and cut back on some of the more risky products completely.
Houston Realtor Bryan Boyle has seen business taper off in 2006, after an unusually busy December. Three of his listings that were supposed to close in February closed in March, and he hasn’t seen much activity on the 10 homes he’s now listing.
“I’m not getting near the traffic that I thought,” said Boyle, of Keller Williams Realty Memorial.
Last month, the number of homes on the market rose by about 13 percent, though such an increase is not unusual this time of year, when homeowners often plan for summer moves.
Plus, the number of days a home stayed on the market in March dropped to 79 from 84 a year ago, according to the Realtor association.
Local economist Barton Smith, who thinks one month of data can contain too much “statistical noise” to be taken too seriously, said the real news will come next month.
“You’ve just got to look at more data to really be sure that there’s a true trend with underlying economic fundamentals as opposed to some aberration,” said Smith, director of the Institute for Regional Forecasting at the University of Houston.
Thanks to the continually low cost of a Texas mortgage, Houston has been bucking the trend seen in other large markets, where prices and sales have been weakening.
A strong energy-related economy combined with healthy job growth have created what some consider to be a Texas housing market boom, although prices have gone up slowly.
“We’re bucking the trend because we’re very oil-related,” Cook said. “We haven’t had a bust. We’ve always had slow growth annually. That’s healthy.”
SOURCE: Houston Chronicle