December home sales in the Houston area jumped 14% from the year before, capping a dramatic turnaround over the course of 2019.
The year's home sales set a new record, outdoing 2018's previous record by 4%, according to Houston Association of Realtors data. More than 102,500 homes were sold in Houston in 2019, the first time the city has broken the 100,000 threshold.
"During the latter half of 2019, we had a sense that we were headed toward a record year for Houston real estate, but no one expected it to be this strong a finish," John Nugent, the association's chair, said in a release.
The housing market in December was very different than that of the year earlier, when mortgage rates drifted up toward seven-year highs and the upward march of home prices slowed. Government-sponsored mortgage company Freddie Mac predicted both trends would continue through 2019, and the Federal Reserve signaled two interest rate increases were on the way, a sign of faith in the economy.
Instead, 2019 saw escalating trade wars shake confidence in the markets, the Fed cut rates and investors, hungry for the relative security of mortgage debt that they were willing to accept lower yields, drive mortgage rates down.
December home sales
The drop in mortgage rates was a balm on the budgets of potential homeowners, who could take out larger loans for the same monthly payments. After mortgage rates dropped, home price appreciation accelerated, ending 13 months of slowing home price growth, according to the S&P CoreLogic Case-Shiller U.S. National Home Price Index, a measure of home prices.
"The low mortgage rate environment combined with the red-hot labor market is setting the stage for a continued rise in home sales and home prices," wrote Freddie Mac in its most recent mortgage rate survey report.
Houston home sales, which gained steam after mortgage rates lowered and surpassed 102,000 by the end of the year, bore out the national trend. Over 2019, the area sold $30 billion worth of homes. December alone, a typically slow month, saw 9,000 homes sold.
Data suggests the surge in home sales may continue into the new year. Another 6,000 home sales were pending at the end of the December, a 23% increase from the year before.
The median home price in Houston last month was $251,000, up 4.6% from the year before, and a breakout of December home sales shows that the number of inexpensive homes is dwindling. There was a sharp drop in the number of homes sold for less than $150,000 and a substantial rise in homes sold for $150,000 or more compared to the year before. Sales of homes between $250,000 and $499,999 rose 27%.
