The Houston and Gulf Coast residential real estate markets experienced a heavy blow thanks to hurricane-turned tropical storm Harvey. Even with the ‘Harvey’ impact, the residential market year-to-date is at a record level. McAlister Investment will be issuing a special update on the short term and long term effect of Harvey on the residential market.
According to the August 2017 Houston MLS Report released on September 13, 2017 :
- August 2017 had a total of 5,917 single family home sales vs 7,972 in August 2016, a decrease of 25.4% year over year. Harvey essentially shut down transactions the last week of August across Houston causing the dramatic decline for the month. On a year-to-date basis, home sales remain 1.8% percent ahead of 2016’s volume.
- "Hurricane Harvey dealt a severe blow to the Houston area and Texas Gulf coast and it will probably be several weeks until we can gauge the storm’s full impact on our housing market,” said HAR Chair Cindy Hamann. “Home sales were humming throughout the first three weeks of August, but the moment Harvey struck the region, everything came to a screeching halt.”
- Pricing seemed unaffected by Harvey. The median home price in August 2017 was $231,700 vs $225,000 in August 2016, an increase of 3.0%, while the average price climbed 2.6% to $296,418.
- Total single-family home inventory increased from 4.0 months a year earlier to 4.4 months’ supply but it is expected to decline as undamaged and repaired homes outpace supply. 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, BuildHouston:
- The Houston-The Woodlands-Sugar Land metro area lost 18,300 jobs in July, according to the Texas Workforce Commission (TWC). The loss was to be expected. The metro area always cuts 12,000 to 16,000 jobs mid-year, the bulk of the losses in state and local education (i.e., school districts, community colleges and state-funded universities) as educators on nine- and 10-month contracts roll off the payroll. The region typically recoups these jobs in the fall when they return to work.
- Financial Activities, Mining and Logging and Health services made up the top sectors of job growth in July 2017. Financial Activities added 1,700 jobs, Healthcare added 1,400 jobs and Mining & Logging added 1,000 jobs new jobs to the area in July.
- The Houston Purchasing Managers Index (PMI), a short-term leading indicator for regional production, registered 51.8 in July, signaling economic expansion in metro Houston for the 10th consecutive month, according to the latest report from the Institute for Supply Management-Houston. The July reading is unchanged from the June PMI.
- The Baker Hughes Oil & Gas Rig Counts decreased slightly to 947 in August 2017. This level represents an increase of 134% 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