Source: US News —
Houston tends to appeal to a wide range of buyers. It’s one of the more affordable major cities in Texas, and it’s loaded with jobs and amenities. Evan Compean, founder and owner of Compean Group, has been in the Houston real estate business for 18 years, and he says it’s easy to see why the city draws so many people.
“You have a great work environment, a great cost of living and you can do so much more in Houston compared to other cities,” he explains.
If you’re thinking of buying a home in Houston, whether as an investment or a place to live yourself, it’s important to take a deep dive into the market. Here’s what you need to know about Houston real estate today and looking forward, based on key data from the U.S. News Housing Market Index.
How the Houston Housing Market Changed in 2022
Single-family home construction slowed down in Houston in 2022. In January 2023, there were 2,692 housing permits issued for single-family detached homes, according to data from the U.S. Census Bureau. In January 2022, there were 4,469. All told, that’s about a 40% year-over-year decrease.
Construction for multifamily homes, on the other hand, picked up heavily in 2022. In January 2023, there were 2,757 housing permits issued for multifamily buildings of two or more housing units. That’s nearly a 74% increase from January 2022, when there were about 1,586 permits.
Total permits for Houston dropped 10% from 2022 to 2023, although multifamily permits accounted for an increased share in 2022.
Compean is beginning to see more home starts himself. “Permitting in the city of Houston is still running low, but builders are cranking,” he says. “We are starting to see new construction pick up.”
Houston Housing Supply and Demand
As is the case in many markets, buyer demand waned a bit in Houston in 2022. And Compean points to higher mortgage rates as a big reason why.
“Higher interest rates are keeping the market down,” he says. These days, Compean says, the average mortgage rate for a 30-year loan is closer to 7%.
“In January, it was dipping just below 6% and we actually noticed a spike in activity,” says Compean. “As soon as rates started going up again at the end of January and into February, activity started going down.”
As of January 2023, based on data from Redfin, Houston housing supply sat at 4.5 months of inventory, representing a year-over-year increase of 2.49%. For context, it can commonly take a full 6-month supply of real estate inventory to fully meet buyer demand and even out the market so that neither buyers nor sellers have a clear upper hand.
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