Hurricane Harvey left Houston in a federally declared state of emergency with heavily flooded streets and interstate highways. Houston home sales plunged for the first time in nearly a year in the aftermath of Hurricane Harvey, according to the Houston Association of Realtors.
Local Realtors sold 5,917 single-family homes in August, a 25.4 percent drop in sales year over year, according to HAR’s most recent monthly housing report. The sales decline affected homes of all price points.
Harvey impacted Houston’s townhome and condominium markets as well. Houston-area Realtors sold 443 townhomes and condos in August, a 31.4 percent decline year over year, according to HAR.
August’s sharp drop in home sales was likely due to Harvey’s timing toward the end of the month. Hurricane Harvey hit the Texas Gulf Coast on Aug. 25. The last week of the month is typically when most home closings are scheduled. Many deals were canceled or postponed as prospective buyers walked from flooded homes or took an extension to re-inspect homes for hurricane damage.
Despite the drop in August closings, home sales remain 1.8 percent ahead of the 2016 volume, according to HAR.
However, pending home sales, an indicator of future home closings, fell 4.7 percent in August. At the same time, active listings, the number of homes available on the market, increased 12.4 percent in August, according to HAR. Fewer pending home sales and an increase in active listings could indicate that a number of buyers walked away from flooded homes under contract, with some of those homes going back on the market to sell “as-is.”
For homes that managed to sell in August before Harvey, prices remained steady, according to HAR. The median price for a Houston home sold in August rose 3 percent to $231,700 while the average home price increased 2.6 percent to $296,418, according to HAR. While Harvey’s impact on Houston home prices has yet to be seen, it’s likely median and average home prices could fall as flood-damaged foreclosures, short sales and “as-is”.
Houston’s housing supply grew from 4 months of inventory to 4.4 months of inventory in August. However, that increased supply will likely fall as housing demand has spiked after Harvey, according to HAR. Nationally, housing supply stands at 4.2 months of inventory. Months of inventory estimates the number of months it would take to sell all the listings in the market based on the pace of sales over the past 12 months.
Homes sold in August took an average of 50 days to sell, according to HAR. Houston’s “days on market” indicator will likely shrink as Harvey evacuees snap up available housing inventory.
Demand for temporary housing — including rental homes — has spiked after Harvey. Single-family home leases jumped 9.4 percent in August while townhome/condo leases jumped 17 percent. The average rent for a single-family home rental in August was $1,857 while the average rent for a townhome or condo was $1,551.
In response to the overwhelming demand for temporary housing, HAR recently launched a Harvey Temporary Housing website, which will allow Harvey flood victims to connect with Houston homeowners willing to rent property, some for free or at a reduced price. Flood victims may access the online portal at: www.har.com/temporaryhousing
Despite the dramatic decrease in housing sales after the traumatic effects of Hurricane Harvey, statistics show that it is still a Seller’s market.