S&P CoreLogic Case-Shiller Index showed that DFW home prices were higher in March
As the spring homebuying season began back in March, home prices in the DFW region were up 3.62% year over year.
The March Case-Shiller numbers for Dallas/Ft. Worth indicate that home prices in the metroplex accelerated upward as spring was just getting under way. This is no surprise given the slight price increases we saw during the slower winter months.
As you may recall, prices were up 3.5% in February and 2.9% in January. The 3.62% figure from March appears to indicate that growth has returned to a more normal long term average. After we saw a huge run up in prices from 2020 through mid-2022, prices pulled back some during 2023 but have been increasing again since last September.
DFW Home Price Details
The chart above shows the history of home prices in the DFW metro area since January 2018. As you can see, we had a huge run up in prices right after covid hit, and that steep climb lasted until just about two years ago. After a slight pullback in early 2023, prices have again been moving upwards, albeit at a more sane pace.
One interesting component of this graph is the double dip action you see on the right side of the chart. Notice how in January 2023 the index dipped and nearly touched the 200 line. It then went back up last summer. Then in January 2024 there was another dip, but this time the dip only went to around 250. The fact that this second dip was slightly higher than the first dip is a sure sign that home prices are moving upward on a big-picture basis.
The real estate market is cyclical. As such, it is normal to see price increases in the summer and then slight decreases in the winter. The key to look for is the relationship of the dips to one another. When subsequent cyclical dips are higher than their predecessors, this means prices are truly moving up over the long term. The left side of the graph above is not normal. There have been very few time periods in the last 50 years where overall prices just went straight up or down. What we are experiencing today in DFW is more normal price behavior.
Interest Rates are Hanging Around 7%
Unfortunately for homebuyers, mortgage rates are proving to be rather pesky this year. I know that back in January a lot of people were talking about rates coming back down below 6% this year, but this simply isn't happening...at least not yet. I always say that mortgage rates are nearly impossible to predict - certainly much more difficult than home prices, and I think you can see why.
Freddie Mac reported last week that the 30-year mortgage rate was at almost 7%. If we look back at March, which is the time period reflected in the Case-Shiller graph above, the 30-year rate was around 6.75%. Obviously, we have seen a sizeable rate increase since that March reading.
Rates have definitely cooled demand some over the last couple of years, but they haven't cooled it so much as to create a buyer's market. The months supply of inventory in March was about 3.4 for the entire DFW area. While this is higher than it was two years ago and even last year, it's still considered a seller's market. Most economists consider 6.0 to be a balanced market between buyers and sellers.
Conclusion
The Dallas/Ft. Worth housing market continues to show strength. With prices rising in spite of mortgage rates rising, it seems that people are still finding ways to buy homes.
What could possibly reverse the DFW housing market? I think only a black swan event (major natural disaster, war, something like covid, etc.) could put the brakes on the DFW market. The fundamental economic forces continue to point to rising prices in this area, and there seems to be no sign that these forces are going to change in the near future. As I've said before, the continued population growth of DFW will only keep adding to housing demand, and builders simply cannot build fast enough. The result of this tight supply will most likely mean continued price increases in homes.
If you are a seller, there is still ample demand out there. You should be able to sell your property relatively quickly as long as it's priced competitively. And, if you are a buyer, you don't have near the competition you had a couple of years ago. While it is a seller's market, many buyers are now able to negotiate concessions that they simply weren't able to do just a few years ago. To sum it up, now is actually a relatively good time to buy or sell, all things considered.