Dallas is one of three housing markets to post its highest annual increase for June, despite data showing overall home prices decelerated for the month, according to the Case-Shiller Index results published Tuesday.
The national Case-Shiller Index is a trailing three-month indicator that measures the change in the value of single-family homes every month and is the leading measure of U.S. home prices.
It is supplemented by two composite indexes. One tracks prices in 10 key U.S. cities, and the other tracks prices in 20. The Case-Shiller report is supported further by indexes tracking sales based on the home’s price relative to the market average.
Dallas, Miami, and Tampa had the highest year-over-year gains in June, according to the 20-city composite in the report. Dallas ranked third with a 28.2% increase, just behind Miami with 33% and Tampa with 35%.
Craig J. Lazzara, managing director at S&P Dow Jones Indices, spoke with The Dallas Express about the current status of the Dallas housing market and the dynamics driving national trends.
“Dallas has a lot of things going for it,” said Lazzara, highlighting Boeing’s move to relocate its global services division to the area. “Like Florida, Texas enjoys a warmer climate, a business-friendly attitude, and no personal income tax.”
“By the standard of its own history, Dallas has performed remarkably well and currently sits in the 98th percentile, despite the national deceleration in June,” Lazzara told The Dallas Express.
He said if you believe that reversion to the mean is an accurate theory, then home prices in Dallas will eventually return to the long-run mean. I would not place any bets on it, though, he added.
He claimed that after the pandemic hit in 2020 and workers realized they could perform their jobs duties outside the office, many packed up and moved to places more congenial.
“Flexibility of remote work and macro events have helped drive the demand for housing nationally, not just in major metropolitan cities,” said Lazzara.
Still, the Case-Shiller report clocked an 18.0% increase in national home prices in June, down from 19.9% in the previous month.
“The deceleration in U.S. housing prices that we began to observe several months ago continued in June 2022, as the National Composite Index rose by 18.0% on a year-over-year basis,” stated Lazzara in a press release that accompanied the Case-Shiller results.
“Relative to May’s 19.9% gain (and April’s 20.6%), prices are clearly increasing at a slower rate. This pattern is consistent with our 10-City Composite and our 20-City Composite,” he added.
The 10-City Composite Index showed a year-over-year increase of 17.4%, down from 19.1% in the previous month. It covered 10 metro areas, including Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco, and Washington, D.C.
The 20-City Composite Index posted an 18.6% annual increase, down from 20.5% the previous month. It included all of the metro areas in the 10-city composite and Atlanta, Charlotte, Cleveland, Dallas, Detroit, Minneapolis, Phoenix, Portland, Seattle, and Tampa.
Before seasonal adjustment, the U.S. National Index posted a 0.6% month-over-month increase in June, while the 10-city and 20-city composites both posted gains of 0.4%.
After seasonal adjustment, the U.S. National Index posted a month-over-month increase of 0.3%, and the 10-city and 20-city composites posted gains of 0.3% and 0.4%, respectively.
“It’s important to bear in mind that deceleration and decline are two entirely different things, and that prices are still rising at a robust clip,” said Lazzara, per the press release.
He stated, “The market’s strength continues to be broadly based, as all 20 cities recorded double-digit price increases for the 12 months ended in June. In 19 out of 20 cases, however, June’s reading was less than May’s, showing the impact of deceleration at the regional level.”
Tampa (+35.0%) was the fastest growing city for the fourth consecutive month, with Miami (+33.0%) and Dallas (+28.2%) holding onto the silver and bronze positions. Prices were the strongest in the Southeast (+29.6%) and South (+29.3%), according to the Case-Shiller Index.
“We’ve noted previously that mortgage financing has become more expensive as the Federal Reserve ratchets up interest rates, a process that continued as our June data were gathered,” said Lazzara. “As the macroeconomic environment continues to be challenging, home prices may well continue to decelerate.”