August Home Prices Up Slightly in DFW
Though values were down from July, on a year-over-year basis DFW homes saw a small rise in price during August.
This is the second month in a row in which home prices were lower on a month-over-month basis but higher year-over-year. Compared with August 2023, prices were up 1.58% across the Dallas/Fort Worth region. Compared with July 2024, prices were lower by -0.47%.
Current Prices Are No Surprise
I talk with people almost daily who wonder if home prices are going to crash in Dallas/Fort Worth. My answer is always the same: It is highly unlikely that home prices in our area will crash.
You can see from the graph above that we are experiencing a cyclical price change right now. The far right side of the graph represents prices at the end of August of this year. The far left side represents August of last year (2023). Year-over-year we are clearly higher, while month-over-month we are seeing a little swoon right now, which is normal for this time of year.
This price graph shows what home prices typically do in a given 12-month period. There is a peak in the summer and a valley in the winter. Taken on the whole, I think home prices are behaving as we would expect them to at the moment.
Rates Declined in August
Of course, the other important piece of data when it comes to the housing market is interest rates. In August, the average 30-year rate continued to decline. At 6.35%, mortgage rates were quite a bit lower than August of 2023 when they were still well over 7%.
Notice the right side of this graph. Mortgage rates bottomed out in mid-September and have been on a tear ever since. We know what interest rates are in real time, but we won't truly know what housing prices did for another couple of months since the Case-Shiller Housing Index runs on a two-month lag. The big question at the moment is: Have rising rates caused prices to decline more in recent weeks?
What Does It All Mean?
The fact that rates have continued to rise rather dramatically this fall likely means that home prices are continuing to drop month-over-month, especially since we are entering the typical real estate slow season. Will we see a year-over-year drop in real estate prices in the coming months? It's hard to say.
If we do see a decline year-over-year, I think it will be slight. Months Supply is still sitting at 4.6 for our region. This says to me that there is still quite a bit of demand for homes relative to the supply available. I know many of you have heard me say this over and over: Migration to the DFW region continues to be robust, and this means demand for housing is not shrinking. And that typically means home prices will rise.
From a big picture perspective, the Dallas/Fort Worth housing market is doing fine. Activity has slowed significantly since mid-2022, and prices have stopped going up so drastically, but the market is healthy. And I think the DFW real estate market will continue to be healthy for the foreseeable future. Month after month I keep saying the same thing now: There are plenty of opportunities for both buyers and sellers in this market. Just don't expect to have enormouse leverage either way. Things are more balanced, and that generally means more compromising from both buyers and sellers.