Houston Real Estate Market Report: Spring 2022

I received my Texas real estate license in March 2022, which means this is my first market report. I want to be clear about what this is and what it is not. I am watching the same data everyone else is watching — Houston Association of Realtors (HAR), Realtors Property Resource (RPR), Freddie Mac, the Fed — and adding the layer of someone who has lived in Houston for twenty-five years and knows these neighborhoods from the inside. I do not yet have enough of my own transactions to draw on. What I have is the data and the neighborhood knowledge, and I will tell you honestly when I am interpreting versus observing.

The headline from HAR’s March 2022 report is not surprising to anyone watching this market: Houston’s median home price hit $335,000 in March, up 19% year over year. Active listings are running about 28% below March 2021 levels. Months of supply is sitting at 1.4 in Harris County — the definition of a seller’s market is anything below three months. Days on market has compressed to 29 days. These numbers are consistent with what I am seeing in HAR and RPR at the submarket level: there is not enough inventory to satisfy the number of buyers looking.

The Rate Picture

This is the variable that concerns me most going into the rest of 2022. Freddie Mac’s Primary Mortgage Market Survey (PMMS) shows 30-year fixed rates at 3.22% the week of January 6th. By the week of April 28th, that number had climbed to 5.10%. That is an enormous move in four months. The Federal Reserve raised its benchmark rate for the first time since 2018 on March 16th — 25 basis points to a target range of 0.25–0.50% — and the Federal Open Market Committee (FOMC) commentary was clear that more hikes are coming. How many and how fast is the question the market cannot yet answer.

The practical implication for buyers in Houston right now: every quarter-point increase in the 30-year fixed rate adds roughly $115 per month in payment on a $400,000 loan. A buyer who qualified comfortably at $450,000 in January is now looking at whether their qualification holds at current rates. The urgency I am seeing from buyers in the market makes sense in that context — they are trying to get to closing before rates move again.

Houston Employment: The Cushion

The U.S. Bureau of Labor Statistics (BLS) March report shows the Houston-Sugar Land-Woodlands Metropolitan Statistical Area (MSA) has recovered its pandemic job losses and is adding employment at a healthy rate. The Greater Houston Partnership reported that Houston added over 100,000 jobs in 2021. The energy sector, which was under pressure during the 2020 price collapse, has stabilized significantly. West Texas Intermediate crude (WTI) crude crossed $100 per barrel in late February following Russia’s invasion of Ukraine, and while no one is predicting a sustained oil boom, the current price environment is supportive of Houston’s largest industry. That employment foundation is a meaningful difference between Houston’s market and some other Texas metros where demand has been more purely driven by pandemic migration.

What I’m Seeing Corridor by Corridor

Inner loop — Museum District, Heights, Montrose, Midtown — is moving the fastest. RPR submarket data shows the highest price appreciation and the shortest days on market inside the 610 Loop. The medical center proximity is generating consistent demand from physician and nurse relocators that I expect to stay durable even if the broader market softens.

In the northwest — Cypress, Bridgeland, early Marvida phases — both new construction and resale are moving quickly. Cy-Fair ISD is a major pull. HAR data shows 77433 (Cypress) and 77423 (Bridgeland-adjacent) among the faster-moving ZIP codes in the metro. My sense from looking at RPR’s market activity scores is that this corridor has room left to run, but I’m watching builder starts closely because an oversupply of new construction would change the picture quickly.

Katy, Sugar Land, and The Woodlands are all showing the same pattern: tight inventory, elevated prices, fast closes. Fort Bend County in particular is benefiting from a buyer demographic that is very specifically targeting that corridor for school district quality and community character.

Down Payment Assistance: Available Now

Worth noting for any first-time buyers reading this: Texas State Affordable Housing Corporation (TSAHC)’s My First Texas Home program currently offers a 30-year fixed mortgage combined with up to 5% of the loan amount as down payment and closing cost assistance. The City of Houston’s Homebuyer Assistance Program (Houston Homebuyer Assistance Program (HAP)) provides up to $30,000 for qualifying buyers in Houston city limits. In a market where down payment is often the barrier rather than income qualification, these programs deserve serious attention.

My Outlook for Summer 2022

I think the market continues hot through summer but the rate movement is a risk I am watching carefully. My read on the HAR data and the FOMC commentary: the Fed is going to keep hiking. The question is whether the Houston market’s employment cushion and inventory constraint are strong enough to absorb meaningfully higher rates without a visible slowdown. My best guess is that we will see some cooling in showing activity and offer competition by late summer, but not a price correction — there simply is not enough supply to create downward pressure on prices even if demand softens. I could be wrong about the timing. The rate movement has been faster than most forecasters predicted. If rates hit 6% by September, I think you start to see more days on market in the suburban price tiers.