Home prices at all-time high

'This is still a seller's market,' Realtors group's chairman says

By NANCY SARNOFF
Copyright 2004 Houston Chronicle

Houston-area home prices reached an all-time high last month as the median surged to $143,120, according to data released Monday.

June marked the fourth time that the area's median price surpassed $140,000, according to the Houston Association of Realtors.

The reason for the run-up in prices is that new-home demand is surpassing supply, association chairman Ted Jones said.

"As an aggregate, this is still a seller's market," said Jones, who is also a chief economist at Stewart Title.

Houston has 6.3 months of housing inventory to absorb, according to the group's data. That means it would take 6.3 months to deplete the existing single-family homes on the market if homes continued to sell at the same pace as in the previous 12 months.

Normal inventory absorption is around nine or 10 months, Jones said.

From June to August of last year, median home prices — the point at which half the homes sold for more and half sold for less — barely topped $140,000.

While the median price is rising, Houston still ranks as one of the nation's most affordable cities. The national median home price was $183,600 in May, according to the National Association of Realtors.

"Whether it's a new or existing home, you still get a lot of home for your buck here," Jones said.

Home sales also shattered records in June. Sales of existing homes, townhomes, high-rise properties and new homes listed on the Multiple Listing Service topped out at 7,415. That's a 17.5 percent jump from the same month last year.

Summer months typically have the highest number of closings because many families choose to relocate before the school year begins.

Aside from a tight inventory, still-low interest rates continue to fuel the market.

Last week, the 30-year fixed-rate mortgage averaged 6 percent, according to Freddie Mac's national survey.

Last year at this time, the rate averaged 5.52 percent.

And when interest rates begin to rise, home buyers scramble to lock in low rates before they disappear.

Still, rising interest rates won't create a drag on the market anytime soon, Jones said.

The 30-year mortgage is projected to average 6.15 percent this year and 6.85 percent next year.

Even then, "interest rates are still extremely affordable," Jones said. "The only thing higher rates will do is return refinancing to a normal level."