HOUSTON – (Realty News Report) – Houston’s home sales reached record levels in February, yet the housing market is now confronting significant challenges as the spring buying season begins.
The local economy faces added pressure from falling oil prices combined with the economic slowdown tied to the coronavirus pandemic. West Texas Intermediate crude tumbled over the weekend from roughly $40 per barrel into the low $30s. That drop is expected to trigger layoffs in Houston and prompt oil companies to reduce spending. At these price levels, many drillers struggle to break even.
Before the coronavirus accelerated, very low mortgage rates—30-year fixed rates below four percent—helped power housing demand.
“The Houston housing market gained momentum in February, thanks largely to record low mortgage rates that some economists say could drop even further,” said HAR Chairman John Nugent of RE/MAX Space Center.
“We are monitoring concerns about how the coronavirus outbreak might affect our real estate market and others around the country. Coronavirus did not influence February housing data, but with Wall Street losses and declining oil prices, we remain cautious and are closely watching market activity.”
HAR reported 6,044 single-family homes sold in February, up from 5,339 a year earlier—a 13.2 percent increase. That total is the highest number of single-family home sales ever recorded for a February in Houston.
The single-family home median price—the midpoint where half of homes sold for more and half sold for less—increased 5.2 percent to $245,000, while the average price rose 5.9 percent to $301,648. Both figures are the highest on record for February.
Historically low mortgage rates typically stimulate housing activity, and in recent days many homeowners rushed to refinance. However, with the broader economy under strain, home sales this spring may not follow the anticipated trajectory.
“The U.S. housing market benefits from a strong demographic tailwind—Millennials and older members of Gen Z—which will be difficult to stop,” said Ralph McLaughlin, chief economist and senior vice president of analytics at Haus. “Short-term economic headwinds, such as a viral outbreak, may dampen sales this spring, but I expect any slowdown to be temporary.”
March 11, 2020 Realty News Report Copyright 2020
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