After an impressive price surge over the pandemic, Dallas-Fort Worth’s housing market is increasingly facing stronger headwinds threatening to slow its pace. While prices remain higher than a year ago, they are beginning to fall, and so are the number of sales in the market.
The median home price in the metro area last month was $394,900, over 12% higher than the one year prior. However, this represents a drop from $399,000 one month earlier in September 2022 and $405,000 witnessed in August.
The number of homes sold in DFW fell 27% annually to 6,921 in October 2022 from 9,841 in October 2021, the largest year-over-year drop.
Not only was October 2022 the third consecutive month of falling activity, but the drops have grown increasingly more prominent.
Higher mortgage rates are prompting some homebuyers to halt their search temporarily, explained RE/MAX DFW Associates Agent Todd Luong.
“Many of my buyer clients are waiting right now instead of buying… Because of the higher interest rates, they cannot afford the hundreds of extra dollars they would have to pay each month. The longer they wait, the more leverage they will have with sellers because homes are sitting on the market longer and inventory is slowly increasing, especially as we head into the holiday season,” said Luong.
Mortgage rates have surged this year amid numerous rate hikes from the Fed. While average 30-year fixed rates softened recently, they persist at roughly 7%, over double the 3% available 12 months ago.
According to Luong, most buyers are delaying purchases because they simply do not expect prices to rise that much. The office he works out of currently averages 1.4 showings per listing per week. This time last year, listings averaged 2.2 showings per week. Not only that, they remain active longer.
“It currently takes about 18 showings before one of our listings will sell… If you do the math there, you will quickly see that the days of sellers getting 20-plus offers on the first weekend are long gone now,” said Luong.
Housing inventory peaked for 2022 in October when it reached 2.7 months of supply, 187% higher than in October 2021. When inventory levels are too short or too long, it is considered unhealthy for a housing market. While last year’s inventory levels were considered far too low, we are still beneath the six-month supply of inventory characteristic of a balanced housing market.
Because supply remains relatively scant, some Dallas agents still consider the current environment “a seller’s market in certain neighborhoods,” according to Luong.
As an example, the supply of inventory in Carrollton and Coppell still sits at only 1.5 months, according to RE/MAX.
Despite the potentially negative trajectory for the housing sector, Dallas has been the beneficiary of the fastest appreciating home prices in the entire state.
According to Luong, the market remains robust, with the population expected to continue expanding. Dallas “is still a very desirable place for companies and employers,” he insisted.
