Dallas/Fort Worth Housing Market Marginally Higher in July
Home prices in the Dallas/Fort Worth metroplex are continuing to move higher, albeit at a snail's pace.
On a year over basis, prices rose 1.88% in July in DFW. On a month over month basis, prices were actually -0.11% lower.
The metroplex housing market is still quite strong, but clearly the huge price appreciations we saw in recent years are things of the past. Of the 20 metro markets that Case-Shiller tracks, only Portland and Denver had a lower annual return on home prices in July than Dallas/Fort Worth.
Is our housing market in trouble in DFW? No. By no means. Homes are still selling, and the market continues to behave in a slightly pro-seller way.
Case-Shiller Indicates a Trend
Have a look at the graph above. As I've pointed out many times before, the left side of the graph is not normal. The long, steady, and steep climb higher was an aberration that we likely will never see again in our lifetimes. Over the last 60 or so years, the real estate market has tended to behave more like what we see in the graph for 2023 and 2024. It's the "rolling hills" look. Each year we have a cycle up and a cycle down, but when looking at the overall peaks and troughs, the trend is higher.
Last year, prices peaked about this time and then moved lower through autumn and winter. It appears we are doing the same thing again this year with prices having peaked in May/June. I would anticipate that over the next few months, month over month prices will continue to edge lower while year over year prices continue to be higher.
Mortgage Rates Lower in July
It is interesting to note that the average 30-year mortgage rate continued to fall in July. As of July 31, the 30-year rate was 6.73% according to Freddie Mac. This was significantly lower than the 7%+ rates we had seen just a month or so earlier.
You may be asking, "If rates were so much lower, why didn't we see a large increase in demand and home prices?" This is a very good question.
I personally would have expected that demand would pick up more with the lower mortgage rates. The truth is, it doesn't appear that demand is picking up. In fact, months supply is continuing to increase, indicating that supply and demand are moving ever closer to one another.
Market Commentary
As I stated, the market is strong and continues to show signs of being a seller's market, meaning that demand remains a little higher than supply. However, there are numerous unknowns out there facing consumers right now, and this creates a bit of a mixed real estate market.
First, we have a rather large national election coming up, and many people simply don't want to make any major life decisions during this time of political uncertainty. I suspect that once the election is settled, more people will turn their attention back to their personal housing needs.
Second, while inflation has technically come down, many consumers are still feeling the pressure of high prices, especially for core items such as groceries and gas. As a result, many people seem reluctant to dive into a major financial decision like buying a new home.
Third, while mortgage rates have fallen, many people still have existing mortgages that are significantly lower than today's rates. This gives them pause when considering buying a new home. They surmise (correctly in most cases) that if they buy a new home, their mortgage payment will increase substantially due to higher home prices and higher mortgage rates.
Finally, there are the unknowns with Realtor and Broker compensation right now. The recently implemented NAR changes are still taking effect, and many brokers and agents are simply uncertain about how to proceed. This necessarily bleeds over into the realm of the consumers because buyers' agents are unable to tell their clients up front exactly how they will be compensated now. This leaves more buyers on the hook for paying their agents out of their own pockets, and the result is a reluctance to buy homes since the cost to get in a new home was already so high.
Conclusion
In short, home prices in Dallas/Fort Worth are continuing to move higher, but there appears to be some trepidation in the housing market right now. Additionally, we are seeing a typical seasonal slow down right now. As a buyer, you definitely have choices, and you generally have more bargaining power now than in recent years. As a seller, if your house is in good condition, it will still sell; it just may take a few months to find a buyer.
Either way, the DFW real estate market is still strong, and if you happen to be a buyer or seller today, there are opportunities. You just have to be patient and always do your due diligence!