DFW Home Prices Rise in November According to Case-Shiller
Intro
Although home prices were down slightly from October according to the Case-Shiller Index, year over year numbers show positive growth in Dallas/Ft. Worth.
For the third straight month now, we have seen home prices increase in Dallas/Ft. Worth on a year over year basis. For much of last year, prices declined slightly, but since September home prices have been inching their way into positive territory.
To clarify, The Case-Shiller index is a robust measure (in my opinion the most robust measure) of home prices that seeks to weed out various price anomalies that can show up in home prices. Because of its robustness, there is a two month lag with the index, which is why we are just now seeing November's numbers.
Historical Price Movement in DFW
Looking at the graph above, we can see that from 2016 through mid 2022, prices basically went up all the time with a more pronounced increase from late 2020 through mid 2022. Historically speaking, this kind of price movement is unusual. Generally, prices tend to move higher on an overall basis year over year in any given month, but there tends to be normal market cycles throughout any given year from month to month. December, January, and February tend to be lower priced months with accelerating prices in springtime that peak somewhere in mid-summer before moving slightly lower in the fall.
One of the interesting things about this chart is that 2023 appears to show a more "normal" housing market cycle. You can see how prices started last January in a bit of a valley and then peaked somewhere mid-year before moving lower toward the end of the year. I want to emphasize again, however, that prices were only moving lower from one month to the next. When comparing the same month from a year earlier, prices have moved higher since September, and it is this year over year price action that is more indicative of how home prices are doing overall.
Home Prices at the National Level
While the DFW market saw home prices improve by 1.7% in November, the rest of the nation actually saw prices rise by 5.1%, with Detroit leading the way with a 8.2% increase. The only major metro area to see year over year price declines was Portland, OR.
Most economists point to a continued housing shortage as the primary reason for the price increase. Until supply increases relative to demand, prices are likely to continue to climb in the near future. Again, as I pointed out last week, many believe that we (especially here in Texas) have already hit market bottom. In all likelihood, we will see prices move higher for most of this year.
The one factor in home prices that is the hardest to predict is mortgage rates. With rates continuing to hover in the mid 6% range, it doesn't appear we are going to get a flood of new home buyers any time soon. Of course, this could change in a heartbeat, but for now it looks as though we will continue to experience a tightened supply in the housing market.
Conclusion
To recap, home prices in DFW as well as the nation have moved higher on a year over year basis for three straight months now. And, each consecutive month has presented a higher increase than the previous month, so it appears that there is a little acceleration happening in home prices right now. I don't expect that we will see a return of the feeding frenzy we saw a few years ago, but I do expect that the market will pick up a little more steam as we head into the spring months in north Texas.