What Is Actually Happening in Houston Real Estate and Mortgage Markets Right Now

The conflict in Iran is escalating again and as Rich Bonn at Habayit Home Loans predicted that escalation is having a direct and immediate impact on financial markets including mortgage rates in Houston and across the country. Here is the full picture of what is happening and what it means for buyers, sellers, and agents working the Houston market right now.

What the Iran Escalation Is Doing to Rates

Mortgage-backed security prices are down this morning. In plain English that means interest rates are going back up. Oil prices jumped approximately 4 percent per barrel as of this morning reflecting the renewed disruption in the Strait of Hormuz.

The situation has deteriorated significantly from where it stood during the brief period of the memorandum of understanding. Iran has resumed aggressive posturing in the strait telling ships the route is closed on their terms. The Trump administration responded with force. The memo of understanding is effectively gone and Iran has expanded its aggression to include attacks on ships from multiple countries in the region including Bahrain, Jordan, and Kuwait. The conflict is escalating rather than resolving and that escalation is creating inflationary pressure that is moving directly into the rate environment.

Tomorrow's Consumer Price Index release will show a slightly lower number because oil prices had come down during the period the memo of understanding was in effect. But that backward-looking data does not reflect the inflationary trajectory being set by what is happening in the strait right now. The CPI improvement is a trailing indicator. The current situation is moving in a different direction.

What the Houston Market Data Is Actually Showing

Despite the macro noise the Houston real estate market data for the week of June 30th through July 6th tells a story of genuine activity.

Listings are up 4.4 percent. Pending listings are down nearly 15 percent which sounds alarming until you look at what happened to those deals. Closings were up almost 10 percent. Approximately 200 additional homes closed compared to a typical week and that accounts for roughly two-thirds of the pending listings that came off the market. Those are not deals that fell apart. Those are deals that closed. Listings taken off the market were down about 3 percent. Showings were up even though it was a holiday week.

Year over year the picture is also constructive. The number of homes sold is up 2.6 percent. Dollar volume is up 4.4 percent. Active listings are up 2.2 percent. The average sales price has increased approximately 1.2 percent.

The median sales price did drop and that number will generate attention in the press. But looking at it alongside the average sales price increase of 1.2 percent tells a more nuanced story about what is happening in the mix of homes selling rather than a broad-based decline in values.

Inventory ticked down slightly which might seem surprising given the conversation about elevated inventory in recent months. But it reflects a seasonal pattern that is entirely normal as families accelerate purchases ahead of the back-to-school period. The inventory picture is adjusting to seasonal demand rather than signaling a fundamental market shift.

What to Do About All of It

There are two ways to respond to a market environment that is producing daily headline volatility from geopolitical events that nobody can fully predict. You can sit and wait and react to the news and effectively never do anything because there is always something making you afraid. Or you can charge on.

Rich Bonn recommends charging on.

This is still a good market in Houston. There are motivated sellers. There are buyers who want to purchase. Sellers are negotiating more than they were a year ago which means buyers have real leverage on price, credits, and rate buydowns that were not available in the competitive market of prior years. Interest rates are higher but the tools to address them through seller contributions are more accessible than they have been in years.

The buyers and agents who act now are buying before the next wave of rate improvement brings competition back to the levels that eliminated negotiating leverage. Waiting for the perfect environment is waiting for something that does not exist in a market driven by global events that do not follow a convenient schedule.

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

Sources

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