Despite multiple cuts in the second half of the year, mortgage rates are rising, and home sellers in Dallas-Fort Worth may have mounting challenges when listing their property moving into 2025.
Inventory is rising, and lending is getting costlier, trends that may force some home sellers in the Metroplex to reduce their listing price.
As of November 21, the average 30-year fixed mortgage rate in the United States was 6.84%, up from 6.08% seen near the end of September, despite the Federal Reserve enacting a second rate cut earlier this month.
As previously detailed in The Dallas Express, even small changes in your interest rate can substantially impact your monthly mortgage payment. As a result, rising rates reduce the total value of the properties potential buyers can afford, typically driving listing prices lower.
Between September and October 2024, houses in the Metroplex saw their values slip by 0.7%, one of the largest monthly drops nationwide. Still, Villupuram believes the market still favors sellers, at least for now.
DFW continues to present a mix of signals.
In October, sales were up month-over-month, with almost 7,500 transactions closed. This represented an impressive 13.4% jump from October 2023. Median prices in DFW were also up, but a more modest 2.5% year-over-year to $399,000.
Inventory grew in October, with more than 30,200 active listings, 37% more than last year. There is currently 4.1 months of housing inventory in the city, with experts typically considering five or six months a balanced market for buyers and sellers.
From start to finish, homes were on the market for 91 days, two weeks longer than October 2023.
While mortgage rates are back to nearly 7%, Villupuram says some buyers likely took advantage of the momentary slip to almost 6% in October, leading to a reasonably active market.
“A lot of buyers (who closed on homes in October) had interest rate lockups when rates dropped … to the low 6%… The (sales) trend that you see is probably going to take a beating in November and December,” Villupuram said.
The fate of DFW’s housing market in 2025 remains a mystery. As of November 25, more than half of interest rate traders expect the Federal Reserve to cut rates an additional quarter percentage point at the December meeting. While the Fed’s decision typically influences the rates borrowers obtain on loans, as we’ve seen recently, mortgage interest payments can still rise even after the Fed has cut rates.