While December was a very active month, the market entered 2021 with quite a slowdown. January faced an almost 50% decrease in sales from December to January. January tends to be a slow month, so it is hard to tell if January in 2021 was unusually slow or if December 2020 was a very active month.
In December, the Month of Inventory (MOI) dropped to an astonishing 1.6; Meaning that homes were selling at a record pace. January seemed to bring the Months of Inventory back up some to 2.8. This MOI change could mean that we are starting to see the market move towards a more balanced state.
The number of new listings did increase by almost 25% around the Houston area; December had 6,837 new listings, and January had 8,420. Home prices remained high even though the average home price did drop by 6% to $331,149.
Mortgage rates also seemed to decline even further from 2.89% in December to 2.74 in January. The low rate has kept buyers in the market, although high home prices have stopped buyers from taking action at this moment.
The new construction side of things has gotten interesting. New home builders have remained prominent in the market, making up for about 25% of single-family home new listings and about 20% of single-family home sales. However, many builders are not able to keep up with the demand for new homes. Moreover, home construction has extended its timeline from 6-7 months for full construction to 7-9 months due to the low amount of material available to construct.
Overall, the market does seem to be heading towards a balance. The slowdown this month finally gave the market a little bit of a break. While prices remain high, the low mortgage rates are counterbalancing the high prices. Even though we sit in a strong Seller’s Market, it is still a good time for buyers to take advantage of these historically low rates. As we continue through the year, we will see prices remain high when compared to 2020. However, the rate at which home prices are increasing will slow down, and mortgage rates will begin to climb back up.