Houston, Texas Housing Market Forecast 2017

Home prices in Houston, Texas have never been higher than they are right now, and there’s a chance they’ll rise even higher during 2017. That’s the Houston housing market forecast for 2017, according to a number of real estate analysts, economists, and industry leaders.

Houston Housing Market ‘Sprinting Toward 2016 Finish’

In a December 2016 press release, the Houston Association of Realtors (HAR) reported that the median price for a single-family home in the city rose by 8.3% in November, compared to a year earlier. The median climbed to $222,000 last month, reaching its highest point ever (even higher than the last housing bubble). The average price for homes in Houston rose to $281,671 in November, a year-over-year gain of 7.2%.

“It looks like the Houston real estate market is sprinting toward the 2016 finish line, based on the solid numbers in November’s report,” said HAR Chairman Mario Arriaga. “The market has shown tremendous resilience throughout the year in the midst of a struggling energy sector…”

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Real Estate Forecast for 2017: Prices Rising More Slowly?

More inventory is coming onto the market, and this could slow the rate of home-price appreciation as we head into 2017. That’s the general forecast for Houston’s housing market in 2017.

Based on current construction trends, many real estate professionals expect the number of homes for sale to increase in 2017 as new inventory comes onto the market.

Mary Piper, director of relocation and operations with Bernstein Realty told the Houston Chronicle: “We feel that the inventory of homes will continue to increase after the new year, with both the election and holiday season behind us.”

HAR also cited inventory gains in its latest market report, saying that home sales were up due to “more plentiful inventory” in the area.

Due to the increased inventory, home prices in Houston could rise more slowly in 2017 than they did in 2016. Rising mortgage rates could also have a cooling effect on the local real estate market next year.

Houston Mortgage Rates Rise Sharply at Year’s End

Houston, we have lift off! Mortgage rates shot up like a rocket in November and December of 2016, reaching their highest level in two years. According to the weekly survey conducted by Freddie Mac, the average rate for a 30-year fixed home loan rose to 4.16% during the week ending on December 15, 2016.

mortgage rate chart 2016
Mortgage rate trends during 2016. Source: Freddie Mac.

The chart above, courtesy of Freddie Mac, shows mortgage rate trends during 2016. You can see the November-December surge on the far right side. So here’s another forecast for the Houston housing market in 2017: Mortgage loans will be more expensive next year.

Looking forward, the Mortgage Bankers Association recently forecast a continued, yet gradual, rise in rates through the end of 2017. In December 2016, the industry group issued the following forecast for the average 30-year mortgage rate:

  • Q1 2017: 4.3%
  • Q2 2017: 4.4%
  • Q3 2017: 4.6%
  • Q4 2017: 4.7%

Granted, this is just a prediction based on current market trends. So you probably shouldn’t “bank” on it. But it does underscore an important point. Both home prices and mortgage rates are expected to continue rising next year.

So home buyers who postpone their purchases until later in 2017 could end up paying more for a house, and for a loan. It’s worth considering.

Higher Loan Limits for Conforming, FHA and VA

Here’s some good news for home buyers and mortgage shoppers. Houston, Texas will see higher loan limits in 2017, for conforming, FHA and VA mortgage loans.

According to a November 2016 announcement from the Federal Housing Finance Agency, the conforming loan limit for a single-family home purchase in Texas will rise from $417,000 in 2016 to $424,100 in 2017. VA loan limits are aligned with the conforming caps, so they’ll also rise to $424,100 next year. FHA loan limits will increase slightly to $331,200.

These changes were made in response to home price gains that occurred during 2016, since loan limits are based on house values.

Disclaimer: This story includes predictions and forecasts for the Houston real estate market in 2017. Such statements are the equivalent of an educated guess. No one can predict future housing conditions with complete accuracy. The Home Buying Institute makes no claims, guarantees or assertions about the Houston, Texas housing market in 2017.