Home prices in Dallas-Fort Worth rose a record 30.7% year over year in March, according to the latest report from the S&P CoreLogic Case-Shiller Index
Rapid Home price growth in North Texas and in cities nationwide continued to break records at the start of the year, but economists expect the market could change its tune in the months ahead. Home prices in Dallas-Fort Worth rose a record 30.7% year over year in March while national prices grew 20.6%, according to the latest report from the S&P CoreLogic Case-Shiller Index. "Demand for homes has stubbornly kept ahead of supply this spring, even in the face of rapidly rising costs," said Dan Handy, an economic data analyst for Zillow. "This imbalance between supply and demand for homes this spring has been the key driver in home price growth that continues to set records month after month." The index compares sales price changes of specific properties over time. Case-Shiller's price estimate is considered more accurate than MLS home sales data which can be influenced by the type of properties that are selling each month.
Economists predict the rapid price growth could finally begin to slow in the coming months as buyer demand is softened by affordability challenges. "Mortgage costs are more than 50% higher than they were a year ago, and prospective buyers will likely start to rethink what they can afford," Handy said. "Sellers may already be responding, with the rate of price cuts now on the rise, to meet buyers where they are. Price growth will likely begin to come back towards earth as many buyers are priced out and inventory rises." Dallas-Fort Worth home showings were down 9% year over year in April and 11% since March, according to ShowingTime.
Price drops are "becoming increasingly common" in some of the most popular housing markets across the United States. According to a new Redfin data. More than 20% of home sellers dropped their price in May in some of the best markets in the nation. "When mortgage rates were at or belw 3%, both local and out-of-town homebuyers were more than willing to tolerate high prices, but at more than 5%, many are now priced out," redfin chief economist Daryl Fairweather said in a statement. "A home's price is driven by the balance of supply and demand, and when demand drops off and supply increases like it is now, rapid price increases evaporate quickly." Areas that saw a huge surge in migration and sharp increases in home prices over the past two years are now seeing "an abrupt drop-off in demand," which is forcing sellers to "drop their prices with increasing frequency," Fairweather said.
Collin, Denton, Ellis and Kaufman counties
As home costs soar across the state, four counties in Dallas-Fort Worth saw especially significant growth over the last year. The median sale price for single-family homes increased nearly 27% in Collin, Denton, Ellis and Kaufman counties in February compared with a year prior, according to the latest numbers from the MetroTex Association of Realtors. Collin County holds the highest median sale price at $475,000. Tarrant County led in sales, with 1,812 homes changing hands. The sale price for local single-family homes sold by real estate agents across North Texas reached a record median of $365,000 in February, up 21% from a year earlier, according to the latest data from the Texas Real Estate Research Center at Texas A&M University and North Texas Real Estate Information Systems. It shot up $15,000 from January to February, a 4% increase.
"Everyone is hoping for a spring inventory influx, but it's unlikely it will be nearly enough to balance this market," Marissa Benat, president of the Collin County Association of Realtors, said in a statement. "We are getting buyers ready to make competitive offers so they can get moved into their home sooner than later."
Inventory is not keeping up with the high demand, and building permits are down as builders face supply chain and labor challenges.
The U.S. housing market shifted into overdrive during the pandemic, with more than 6 million homes selling in 2021 despite skyrocketing prices in many cities. The median selling price for a home in November, $416,900, was nearly 25% more than it was in February 2020. In the early weeks of 2022, there's no sign that cutthroat bidding and rising prices won't continue. The total inventory of homes on the market dipped below 300,000 nationwide in early January — less than half of the inventory available before the pandemic. "It's uniquely challenging for first-time buyers, since they're not benefitting from the increase in home prices," said Realtor.com chief economist Danielle Hale, who predicts more record-high home prices this year. "We don't have prices decreasing in any area of our housing forecast, calling into attention that many of these issues are nationwide."
Homebuyers got crushed last year as home prices soared at their highest clip on record. Housing economists saw that price growth—which peaked at a year-over-year rate of 20% last year—as simply unsustainable. Their economic models agreed: Among the seven forecast models reviewed by Fortune heading into 2022, every single one predicted home price growth would slow significantly this year.
But over the past few weeks, that consensus is no longer so unified. Now, more industry insiders are throwing out their previous forecasts and replacing them with more bullish short-term outlooks. Indeed, some experts say the 2022 spring housing market might go down as one of the most competitive on record.
Look no further than Zillow. Back in December, the home listing site predicted that U.S. home values would climb 11% this year. Economists at Zillow now say that forecast is too conservative. Their latest forecast finds home prices are set to spike 16.4% between December 2021 and December 2022. If it comes to fruition, it would mark another brutal year for home shoppers.
Home sales in North Texas are slowing. But buyers aren't getting a price break. Almost 54% of the homes sold in the Dallas-Fort Worth area through September went for more than the asking price. That's higher than the nationwide average of properties that are pulling in more dough than the sellers are asking, according to a new report by Porch Group, a home sellers service firm. "In most years before the pandemic, the percentage of homes selling above asking hovered around 20% during off-peak times and around 25% during the busy summer season," analysts at Porch.com said. "In 2020 and 2021, however, the share has remained much higher than usual. Throughout 2020 and 2021, the market has seen steep increases in home prices as a growing number of buyers compete for a limited inventory of homes," the new report said. "These conditions have required bidders to be aggressive in their offers to beat out competitors, often offering amounts significantly above sellers' asking price."
DFW homes are selling for an average of 102% of asking price through the first three quarters of this year. "The latest rankings show that prices in some metro areas, such as Atlanta and Dallas, are rising rapidly, producing market premiums much greater than the last housing run-up about 15 years ago," the new Florida report says. Dallas-area home prices were up 25% year-over-year in the latest S&P CoreLogic Case-Shiller Home Price Index.
North Texas home sales by real estate agents have been down from a year ago in each of the last four months because of the shortage of properties on the market and growing affordability challenges.