Houston Housing Market Losing Energy

Home For Sale Sign in Front of New House.

Houston’s booming housing market is losing some of its momentum due to the steep decline in oil prices in recent months.

The Houston Association of Realtors reported Wednesday that finalized sales of homes in the metropolitan area increased by 6.1% in January from a year earlier, marking a deceleration from the market’s 11.6% year-over-year gain in December.

A further slowdown appears to be on the horizon. The number of homes listed for sale in the Houston area declined by 5.9% in January from a year earlier to 26,556. The market’s pending sales declined by 9.3% to 3,382.

Economists and other housing observers have expected Houston to lose momentum because oil prices declined by roughly 50% since last summer. Robert Dye, chief economist at Comerica Bank in Dallas, expects home-construction starts in the Houston area to decline by 11% this year.

“January was a strong month overall for the Houston housing market, but we still expect to see sales cool as a result of lower oil prices and the limited supply of homes,” said Nancy Furst, chairman of the Houston Realtors association, in a statement. “We’ve already started to see declining townhome and condominium sales.”

Ms. Furst and others describe the anticipated slowdown as a “normalization” for a housing market that has outpaced nearly all others in the economic recovery due partly to its huge stable of oil and gas companies. Home-price appreciation in Houston in the past few years has often outpaced the market’s 10-year average annual gain of 3.9%.

Houston has led U.S. metro areas in residential building permits for several years, tallying 63,678 last year to far outpace the next closest metro area: New York City with 47,405.

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