Page 12 - April 2023

On an industry specific basis, professional services, con- improved but remain below pre-pandemic levels. And it
struction, oil and gas, and healthcare indicated continued takes longer to sell a home now than it did 12 months ago.
expansion during the January PMI survey. The leisure and Single-family home sales fell 29.9 percent in Janu-
hospitality, real estate, and trade, transportation, and ware- ary ’23 compared to January ’22. This was the weakest
housing subsectors reported activity was flat in January. January since ’19 when the region had 200,000 fewer
The PMI has eight subcomponents. Two of the three jobs and 350,000 fewer residents. Sales of townhomes and
with the strongest correlation with the economy now condominiums, which account for seven percent of the
point to a weak contraction while a third indicates contin- total market, fell 36.7 percent.
ued growth. The drop in sales continues to weigh on home prices.
• The sales/new orders index fell 2.3 points to 47.2. The median price for a single-family home in January ’23
• The lead times index fell 4.1 points to 48.7. was $315,000, down from its peak of $353,995 in June ’22.
• The employment index fell 3.4 points but remains January is always the slowest month for sales. Prices
solidly positive at 55.5. typically slip 8.0 to 13.0 percent from levels of the
previous June. This January’s $40,000 drop was an 11.2
However, the lead times indicator is troublesome and percent decline and aligns with historic patterns.
may be overstating the local slowdown. In October ’21, Homes are also selling at a slower pace. The average
the lead times index hit 68.0 as pandemic-induced short- days-on-market increased throughout last year. It took
ages of goods and products caused delays in deliveries 59 days to sell a home in January ’23, nearly three weeks
to customers. The record-high lead times index helped longer than it did in January ’22. Prior to the boom,
pull the PMI up to 61.0 that month. Supply chains have between 60 and 70 days was the norm for January.
improved significantly since then, leading to quicker Inventory typically jumps in January, with 3,000 to
deliveries and thus a decline in the lead times index but 4,000 new listings coming on the market. This year the
not necessarily a decline in the overall economy. jump was subdued with about 2,300 new listings. Home-
The Houston PMI aligns with results from the Dallas owners who purchased or refinanced at rates under 4.0
Fed’s January surveys of business conditions in Texas. percent are reluctant to sell since they would face signifi-
According to the survey: cantly higher interest with the purchase of another home.
• New orders in manufacturing fell and capacity The rate on a 30-year mortgage peaked near 7.1 percent
utilization slipped, but respondents pointed to in early November. The week of Christmas, the average rate
stronger job growth and longer workweeks. The was 6.3 percent. In late February, it was 6.1 percent. Prior
future production index rose, signaling output to ’22, the rate on a 30-year note averaged 3.8 percent.
growth over the next six months.
• In the service sector, more respondents reported AVERAGE INTEREST,
rising revenues than falling. They also pointed to 30-YEAR FIXED RATE MORTGAGE
stronger job growth and steady workweeks.
• Retail sales fell in January and inventories rose.
Respondents continue to hire but in general,
reported shorter workweeks.

HOUSING SLUMP
The slump in Houston’s housing market continues.
Home sales fell in January. Prices continued their down-
ward drift. Interest rates have slipped from their recent
peak but remain well above historic norms. Listings have

The median price for a Source: Freddie Mac
single-family home in
January ’23 Higher interest rates and home prices have driven up
was the monthly principal and interest payments. For a
median-priced home in Houston, those are up by over 80
$315,000, percent compared to three years ago.
Housing affordability remains a challenge. Only 40
down from its peak of percent of Houston households earned enough to pur-
$353,995 in June ’22. chase a median-priced home in Q4/22, according to the
Houston Association of Realtors. That’s down from 51
percent in Q4/21.

12 NBIZ ■ April 2023