HOUSTON – (By Michelle Leigh Smith for Realty News Report) – July set a new record in Houston real estate, with nearly 9,000 single-family homes sold, the Houston Association of Realtors reported.
HAR recorded 8,953 single-family home sales in July, surpassing the previous monthly high of 8,385 homes sold in July 2018.
“Real estate sales are rising like never before,” said Realtor Jeff Walters of Save 1900 Realty and Virginia Malone & Associates. “We closed a deal this year with a 19-year-old man and his 18-year-old girlfriend. They had saved a 20 percent down payment and still had money left in the bank.”
The July surge was driven by lower mortgage rates and a larger supply of homes after a period of extremely tight inventory that made it hard for buyers to find desired properties.
At the end of July the Federal Reserve cut interest rates for the first time in more than a decade. With global economic pressures, analysts anticipate another rate reduction in September, possibly as large as half a percentage point.
“Buyers have been awaiting the Fed’s announcement, though many don’t realize that mortgage rates are not directly tied to short-term rates,” said Frank Ferrara, senior loan officer with Republic State Mortgage.
Falling interest rates make home purchases more affordable.
Housing analyst Ivy Zelman of Zelman & Associates told CNBC that each quarter-point drop in mortgage rates is roughly equivalent to a 3 percent reduction in home prices.
“Jumbo loans are around 3.875–4.0 percent and conforming loans are between 3.625–3.75 percent,” said Rhine McNeill, a top producer at Carnan Properties. “Loan activity has steadily increased over the past few months, and market activity has been brisk in certain price ranges, particularly $250,000–$700,000.”
HAR reported the largest sales gains occurred in the $500,000–$750,000 range, up 22.0 percent compared with July 2018. Homes priced $250,000–$500,000 rose 16.9 percent, and the luxury segment ($750,000 and above) increased 5.3 percent.
The median price for a single-family home—the midpoint where half the homes sold for more and half for less—reached a July high of $250,000, up 2.2 percent year over year, HAR said.
The July total represented an 11.6 percent increase from the same month last year.
John Marshall, an agent with Roger Martin Properties, said, “I see younger buyers responding to lower interest rates because mortgages can be cheaper than rent. Sales are very strong in Sharpstown, especially for fixer-uppers. Buyers are purchasing at lower prices, investing in upgrades and realizing healthy profits.”
Gail Nash of Keller Williams said, “I’ve finally seen open-house activity again. I’m holding another this Sunday. People looking now seem motivated—a big change from pre-July 4 traffic. Maybe it’s the buzz about rates, even if they don’t move much.”
“Lower interest rates will open the market for selling and refinancing,” said Realtor Jeff Walters. “I believe this is beneficial for our city and the national economy.”
The momentum in Houston home sales appeared likely to continue into August and possibly beyond. Pending home sales in July rose 19 percent compared with July 2018, HAR reported.
Houston Realtors are selling homes at a record-setting pace, putting 2019 on track to be the strongest sales year on record. Year-to-date sales are running about 3 percent ahead of last year.
HAR Chair Shannon Cobb Evans of Heritage Texas Properties said, “We believe the Houston real estate market is positioned for another record year, driven by a healthy local economy, low mortgage rates and an improving supply of homes.”
Aug. 5, 2019 Realty News Report Copyright 2019
Read the New Book by Ralph Bivins, Editor of Realty News Report
Houston 2020: America’s Boom Town – An Extreme Close Up
Available on Amazon