DFW Real Estate Market Continues to Have Tight Supply Amidst Rising Rates and Prices
The narrative surrounding the Dallas-Fort Worth housing market has remained consistent for several months.
The January Case-Shiller Home Index numbers show that DFW home prices increased 2.89% year over year, continuing the upward trajectory that has been in place since last fall. Along with prices being higher, mortgage rates are now approaching 7% once again, and inventory in the DFW area remains tight.
DFW Home Prices Continue to Climb
According to the S&P CoreLogic Case-Shiller Index for Dallas/Ft. Worth, home prices in DFW have been going up on a year over year basis since September of last year.
You can see from the graph that DFW home prices remain well above what they were even in 2021. We hit that peak in June 2022 and haven't quite made it back to that point yet, but we are definitely seeing a trend upward.
To be clear, we don't yet have the Case-Shiller numbers for February or March since the index runs on a two-month lag. However, there has been no sign that prices are going down. With the spring buying season just getting going, chances are that prices will continue to rise for the near future.
At the national level, home prices were up 6.03% in January, which is interesting given that DFW has been one of the hottest real estate markets in the country for several years now. Still, the overarching point is that home prices are rising, and those that are waiting for a drop to buy will have to continue to wait - possibly for a very long time.
Mortgage Rates Higher
Along with home prices, mortgage rates are continuing to climb as well. Freddie Mac reported this week that the 30-year fixed rate mortgage hit 6.88%, which is 6 basis points higher than last week.
Sam Khater, Freddie Mac's Chief Economist, says, "Mortgage rates have been drifting higher for most of the year due to sustained inflation and the reevaluation of the Federal Reserve’s monetary policy path." And, with the news this week that inflation is running hotter than expected, it appears the sustained inflation is set to continue, which likely means mortgage rates will not go lower any time soon.
DFW Housing Inventory Remains Constrained
According to local MLS records, the supply of homes in DFW remains relatively low as well. At the end of March, the Months Supply figure stood at 3.4 for the entire DFW metroplex, which is still well within the seller market territory. Months Supply has shown signs of increasing in recent months, but the increases have been minute.
In addition to supply being tight, there just aren't many homes changing hands in DFW. Closed sales were down over 10% year over year in March for the DFW area, indicating that many people have chosen to sit tight rather than sell and have to take on a mortgage with a much higher rate than their current rate.
Conclusion
The Dallas/Ft. Worth housing market continues to be strong in terms of price stability. There is nothing to indicate that prices will go down any time soon. Along with this, inventory remains relatively low, and volume also remains low. Both of these factors are likely the direct result of mortgage rates remaining near 7%.
Many people had expected and hoped that the Fed would lower rates this year, but that possibility seems to be getting more and more slim. As a result, mortgage rates are likely not going to go lower by any significant amount. Barring any unusual world or economic events, it seems likely that the DFW real estate market will continue on its current path with prices rising and inventory volume remaining low for the foreseeable future. The question for those contemplating a move is, do you keep waiting?