DFW Housing Market 2024 Wrap
The price of homes in the Dallas / Fort Worth metroplex rose slightly last year, while inventory remained constrained.
Key Takeaways
- The S&P CoreLogic Case-Shiller Home Price Index for Dallas / Fort Worth showed an annual increase of 1.61% for 2024.
- DFW sales volume was the lowest it's been since 2015.
- Months Supply ended the year at 3.26.
S&P released the December numbers for the Case-Shiller index this past week. As a result, we now have official home price data for the entire year of 2024 for the nation as well as for 20 of the largest metro areas.
As a reminder, the Case-Shiller is a robust index designed to track the price of single family homes in various metropolitan areas across the U.S. as well as the nation as a whole. The index tracks the price of matched pair sales (i.e. same home selling multiple times) using arms-length sales data. In other words, the index seeks to weed out homes that sell to relatives or friends at below market value. It also excludes sales like investment homes that sell at reduced rates due to poor home conditions.
Dallas / Fort Worth Home Prices
The Case-Shiller Index for DFW indicates that home prices rose 1.61% in the metroplex in 2024. Though a far cry from the nearly 30% increases we saw just a few years ago, it is nonetheless an increase. Of the 20 metro areas that the Case-Shiller tracks, only Denver and Tampa were lower than Dallas / Fort Worth.
Nationwide, prices rose a more modest 3.92%. New York, Boston, and Chicago had the highest annualized returns last year with New York seeing a 7.22% increase.
Take a look at the graph above, which shows home prices for Dallas / Fort Worth since 2015. Since the beginning of 2023, we have settled into a sort of rhythm with prices. Each of the peaks on the right side of the graph came in the middle of summer, while the troughs came in December and January. As you can see, each peak and trough are higher than the previous peak and trough, indicating we are in a healthy real estate market right now. With that said, we would expect to continue to see prices rising month over month through July or August of this year.
Mortgage Rates
According to Freddie Mac, interest rates at the end of 2024 were about where they are now. During the last week of December, the average 30-year mortgage rate stood at 6.85%. This week it averaged 6.65%.
As I have pointed out previously, interest rates are likely going to stay in the 6% - 7% range for the foreseeable future. The days of 3% mortgages are a thing of the past, and they are unlikely to happen again in our lifetime. As a result, people are slowly getting used to these rates. Prospective buyers who have been sitting on the sidelines waiting for significantly lower rates will gradually enter the market. This in turn should strengthen our housing market even more.
Inventory Levels
One reason home prices have continued to rise is that inventory has decreased proportionally to demand. Look at the chart above. The blue bars represent the number of home sales each year. As you can see, the blue bar at the far right of the graph is roughly the same height as that of the bar in 2015.
According to the Texas A&M Real Estate Research Center, DFW had just over 91,500 homes trade hands last year. This was fractionally more than 2023. The last time we saw numbers this low was 2015 when our population was approximately 7.1 million people. That's almost 1 million fewer people than today!
As additional evidence of low inventory, consider the Months Supply figure. As of the end of 2024, Dallas / Fort Worth had about 3.26 months of inventory available. While this is higher than we were seeing during the mania of 2020 and 2021, it is still relatively low. This just underscores the fact that housing inventory remains constrained.
Conclusion
To sum it all up, 2024 was a year in which DFW home prices rose slightly with inventory remaining tight. It appears that 2025 is picking up where 2024 left off. Inventory continues to be relatively low and mortgage rates remain in the 6.5% - 7.0% range. Unless something drastic happens, I think we can expect to see continued home price appreciation this year with inventory levels remaining about the same or perhaps shrinking a little.