Dallas/Ft. Worth Home Prices Edge Higher in May
Home prices were up 2.61% year-over-year in May according to the Case-Shiller Index.
The Dallas/Ft. Worth housing market continues to show strength, and this should come as no surprise to anyone.
Have a look at the chart below and notice how we are inching closer and closer to that high point that we hit in June 2022. We aren't there yet, but if prices continue to increase each month as they have been, we could hit that point in July or August of this year.
Interestingly, the DFW Case-Shiller numbers are weaker than nearly all the other metro areas in the U.S. Las Vegas and Los Angeles were each up over 8% year-over-year, and New York was up over 9%! At the national level, home prices were up 5.94% year-over-year in May. Of the 20 metro areas that Case-Shiller tracks, only Denver, Portland, and Minneapolis were lower than Dallas/Ft. Worth. However, I wish to point out that none of the major metro markets showed a price decline in May. Home prices are showing strength nationwide right now.
Mortgage Rates
How are mortgage rates looking? At the end of may, the 30-year note stood at 7.03% according to Freddie Mac. That was slightly lower than where it stood in April, but clearly it was still elevated relative to a couple of years ago.
Once again, as in previous months, it appears that higher mortgage rates are not preventing home prices from moving higher. Somehow, people are still managing to find ways to purchase homes at ever higher prices.
Are there any signs of the market softening?
Months Supply
I haven't mentioned the Months Supply figure in a bit, but it is starting to look interesting to me. If there is any sign of softening in the DFW housing market, this could be it.
As a reminder, Months Supply tells us how much inventory is available at a given time. Currently, in DFW, the Months Supply is at 4.7. In May (the last Case-Shiller numbers we have), it was 4.0. Clearly this number is moving upward at a pretty good clip.
A reading of 6.0 is considered a balanced market where buyers and sellers are equal. Anything below 6.0 is considered a seller's market where demand is outstripping supply.
Based on this, you can see that we are still in a seller's market in DFW, but the number is quickly moving toward a more balanced market. Does this mean we will exceed 6.0 soon and head into a buyer's market where prices are likely to decline?
I personally think this is still unlikely. We may continue to equalize more, but I doubt that we will see a true buyer's market any time soon. Dallas and Fort Worth are continuing to experience population growth, and this will most likely keep demand running hot. Even if months supply moves over 5.0, housing prices will likely continue to move upward in our area.
Conclusion
Once more, Dallas/Ft. Worth home prices are continuing to move higher, albeit at a slower pace than much of the rest of the country. Of course, the flip side to this is that DFW home prices were continuing to move higher a couple of years ago while much of the rest of the country was declining.
Mortgage rates were also relatively high in May, but since then have come down just a little. It will be interesting to see how the Case-Shiller Index reads when the June and July numbers come out.
Because the Dallas/Ft. Worth housing market continues to be strong and stable without being overheated, buying and selling property is generally easy to do, so long as the property is priced appropriately. As the Months Supply figure indicates, buyers and sellers are more evenly matched now than they've been in quite a few years. This just means that if you are looking to buy or sell, you will likely have some negotiating room with the other side of the deal, but you won't be able to get everything that you might want.