The Houston and Gulf Coast residential real estate markets experienced a heavy blow thanks to hurricane-turned tropical storm Harvey; however, Houston demonstrated its “Houston Strong” resiliency during the four weeks that followed with a rebound in home sales and the strongest rental activity of all time.
According to the September 2017 Houston MLS Report released on October 11, 2017:
- September 2017 had a total of 6,913 single family home sales vs 6,636 in September 2016, an increase of 4.2% year over year, rebounding from a nearly 24% plunge in August due to Harvey. On a year to date basis, home sales remain 2.3% ahead of the 2016 volume despite Harvey’s rampage across our region. All segments of the housing market enjoyed gains except for homes priced below $150,000, with the greatest sales volume reported among luxury homes in the $500,000 to $750,000 range.
- "I don’t think anyone expected to see home sales in positive territory this soon after a natural disaster of Harvey’s magnitude, but the September report speaks volumes about the incredible resiliency of the Houston real estate market,” said HAR Chair Cindy Hamann.
- Pricing seemed unaffected by Harvey. The median home price in September 2017 was $232,000 vs $219,900 in September 2016, an increase of 5.5%, while the average price climbed 5.4% to $291,767. Both figures represent record highs for a September.
- Total single-family home inventory increased from 3.9 months a year earlier to 4.1 months’ supply in September 2017. While housing inventory grew slightly, it was down compared to the 4.4 months’ supply immediately preceding Harvey’s arrival. As expected, property flooding and continued consumer demand for homes lowered inventory levels. The housing inventory for the U.S. currently stands at a 4.2 months’ supply per the National Association of Realtors (NAR). Anything below 6.0 months’ supply is considered a tight market.
Texas Workforce Commission, GHP, Baker Hughes:
The Houston-The Woodlands-Sugar Land metro area lost 3,900 jobs in August, according to the Texas Workforce Commission (TWC). The loss was to be expected due to the summer months coming to a close and the immediate effect of Harvey.
- The Houston Purchasing Managers Index (PMI), a short-term leading indicator for regional production, registered 48.6 in September, signaling partial recovery in metro Houston from Hurricane Harvey. After 10 consecutive months of expansion, Hurricane Harvey pushed the PMI below 50 in August.
- The Baker Hughes Oil & Gas Rig Counts decreased slightly to 940 in September 2017. This level represents an increase of 132% from the bottom of 404 in May 2016 demonstrating sustained growth in the energy market.
While Houston’s long-term financial and real estate markets will continue to benefit from population growth and increasing job growth, the short term effects of Harvey will be felt through the end of 2017. Overall, the Texas single-family residential markets continue to do well from the population growth, job growth, and an increase in first time homebuyers.
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Paul Connor , Hydie McAlister , Jim McAlister, Sr.
Principals, McAlister Investment Real Estate
Vice President, McAlister Investment Real Estate