What Is Actually Happening in Houston Real Estate and Mortgage Markets This Week

Rich Bonn at Habayit Home Loans has the weekly breakdown of what is moving in the Houston market and what buyers, sellers, and agents need to understand about the mortgage environment heading into the back half of summer.

The Houston Market Numbers This Week

Closings were down slightly from the prior week but context matters here. The previous week was a massive closing week as buyers and sellers pushed hard to get transactions completed before the Fourth of July. The slight pullback this week reflects a return to normal pace following that surge rather than any underlying weakness in the market.

Showings were up 3.2 percent which is the most direct measure of active buyer interest and it is pointing in the right direction. Listing views are down. New listings are down. Pending listings are down. But as Rich Bonn explains the pending decline reflects a market where inventory has been absorbed rather than a market where interest has dried up. A significant number of these homes sold. Others were taken off the market by sellers who were not ready to transact at current conditions.

Overall supply remains solid. This is still a good time for buyers to negotiate and the data supports that position clearly.

The New Home vs Resale Conversation Worth Having

A story on national news this morning caught Rich Bonn's attention on his drive back from the gym. In some markets it is now cheaper to buy a new home than a comparable resale home. The reason is straightforward. Builders need to move inventory off their production lines and they are offering significant incentives including subsidized interest rates to make that happen.

Resale sellers have the luxury of time in most cases. Unless circumstances like divorce, relocation, or death force a sale a homeowner can wait out a market that does not feel right. Builders cannot. Their business model requires moving completed homes and that urgency creates concessions that individual sellers simply cannot match.

The word of caution Rich Bonn offers is worth sitting with before getting too excited about new home pricing. If a new home looks like a bargain today the question to ask is how much more the builder might need to slash prices before the community sells out and how much equity a buyer could potentially lose between contract and closing on a property where the builder's competitive situation is still evolving.

What the Iran Re-Engagement Is Doing to Inflation

The re-engagement in the Strait of Hormuz with Iran has pushed gas prices up at the pump significantly more than oil prices themselves have moved. That gap reflects the immediate consumer impact of supply uncertainty even before the underlying commodity price has fully adjusted.

This matters for inflation in two specific ways. The Consumer Price Index and Producer Price Index readings for June came in tame because they reflected the period before the current escalation. The numbers coming in future readings will reflect the higher energy costs that are flowing through the system right now. Gas prices affect the cost of getting everywhere. Energy prices affect the cost of producing everything. Both feed into inflation and both are moving higher because of the situation in the strait.

The unemployment picture offered some good news to offset the inflation concern. New claims are down and continuing claims are also down which reflects a labor market that is holding up despite the uncertainty in other areas.

What the Fed Is Saying and What It Actually Means for Rates

New Fed chair Kevin Warsh is describing an economy growing at a solid pace with productive capacity expanding. The market is pricing in a potentially higher Fed funds rate but Rich Bonn does not expect that to materialize. Warsh's preferred inflation measure the trimmed CPI is showing inflation running at 2.4 to 2.6 percent which is considerably more benign than headline numbers and provides cover for a more patient approach to rate policy.

There are two distinct camps within the Fed right now. Dovish governors who see the trimmed inflation data and want to hold or ease. Hawks who are watching the re-emerging geopolitical inflation pressure and want to keep rates elevated. That internal tension is going to produce some noise in the coming weeks and buyers should expect rate volatility to continue as those two camps work toward a consensus view.

What This Means for Buyers Right Now

Interest rates have eased slightly and as Rich Bonn explains more buying power is more better. More buying power means the ability to negotiate price more effectively. The ability to negotiate seller contributions more effectively. The ability to sit in the driver's seat of a transaction rather than scrambling to make numbers work.

This is still a great market to buy in Houston. Supply is available. Sellers are negotiating. Builder incentives are creating specific opportunities for buyers who evaluate them carefully. And the negotiating tools available to buyers right now including seller contributions toward closing costs and rate buydowns are more accessible than they have been in years.

For self-employed buyers who have been told no by conventional lenders because of what their tax return shows bank statement loan programs are available that qualify based on actual deposits rather than taxable income. The tax return is not the end of the conversation. It is just the beginning of a different one.

Reach out to Rich Bonn at Habayit Home Loans at 281-841-7234 with any questions about what the current market means for your specific situation in Houston.

Sources

HoustonAssociationofRealtors.com
FederalReserve.gov
BureauOfLaborStatistics.gov
EnergyInformationAdministration.gov
MortgageNewsDaily.com