In the third quarter of 2023, the U.S. housing market witnessed a notable increase in home prices, primarily driven by a persistent low inventory of available homes. This trend, as indicated by the Federal Housing Finance Agency (FHFA) House Price Index, showed home prices rising 2.1% quarter over quarter and 5.5% year over year in Q3. The month-over-month increase in September was 0.6%, continuing a trend of accelerating house price growth.
All census divisions reported an increase in house prices, supported by the low supply of homes for sale. The appreciation was not uniform across states, with regions like Vermont, Maine, New Hampshire, Connecticut, and New Jersey recording the highest annual appreciation rates, whereas areas like Hawaii and the District of Columbia saw slight declines.
In the context of Texas, the real estate market reflected these national trends while also exhibiting unique state-specific developments. August 2023 saw a significant rebound in Texas home sales, with a 9.5% increase from the previous month. However, this was still 8% lower than the prior year, indicating a complex interplay of market forces. The rise in new construction sales, a 20% growth accounting for 21.7% of the market, highlighted a robust demand for new homes. The average days on the market in Texas dropped to 55, suggesting a potential stabilization.
The housing supply in Texas has been steadily increasing, with active listings up by 5.9% in August. Despite these increases, the months of inventory only marginally dropped to 3.2 months, underscoring a sustained demand in the market. High mortgage rates, with the 30-year fixed-rate mortgage reaching 7.1%, have led to a decrease in mortgage applications by over 20% in the past eight months, reflecting the broader economic factors influencing buyer decisions.
The state also saw a 5.3% increase in single-family construction permits, indicating potential growth in housing inventories. Dallas and Houston led in the number of permits, while Austin rebounded after a previous slowdown. Despite consistent price gains throughout 2023, Texas's median home price experienced a slight dip of 0.3% in August, with minimal changes observed in the major metros.
Nationally, the record high home prices continued their upward trajectory. New home sales in October saw a 17.7% year-over-year increase, with the South, including Texas, dominating this growth. New home construction, though moderated by rising interest rates, remained well above pre-pandemic levels, with builders prioritizing the South and West, including Texas.
The S&P CoreLogic Case-Shiller Home Price Index and the Federal Housing Finance Agency's House Price Index both recorded all-time highs, reflecting the ongoing tight inventory situation. However, these gains varied geographically, with certain regions experiencing more substantial increases than others.
In summary, the Texas real estate market in Q3 2023 mirrors the national trend of rising home prices due to low inventory, with additional complexity added by local market dynamics such as increased housing supply, high mortgage rates, and specific trends in construction and sales activity. The overall picture is one of a resilient market adapting to a mix of stabilizing and fluctuating economic conditions.
I hope you have found this blog post super helpful. If there is anything else we can do for you, including helping you sell (or buy) a home, I would be honored to assist. I hope you have a great day/evening.
We are so happy you found our little corner of the interwebs. We look forward to y'all reaching out to us. We love to answer questions and welcome them. Recently we created some local maps, and you can download those by clicking the image/link above. Below, you will find an index of some very helpful information to assist you in learning more about the Houston suburbs. If you are relocating to our neck of the woods, we hope you reach out to us, because we would love to help you by being your local realtor and friend. Thoughtfully written for you. Hugs, Jo.
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