TEXAS, USA — This story originally appeared in the Dallas Business Journal.
Home sales continue to cool in Dallas-Fort Worth and inventory on the market keeps climbing, while home prices are rising at a slower pace.
Active housing inventory in the DFW market is up 94% over last year, while sales are down 13.7%, according to the latest Re/Max National Housing Report. The number of houses sold across DFW totaled 9,182 in August compared to 10,635 homes in August 2021.
The average DFW home is selling in 30 days — up 55% from an average of 23 days on the market a year ago.
The median DFW home sale price for August was $405,000, which is 14.1% higher than one year ago, but 2.2% lower than in July. The median sale price in North Texas was $354,945 at this time last year.
Looking forward, Texas residential real estate agents are the most skeptical about their markets continuing to gain inventory, according to a separate report. Local agents estimate Texas buyers will only have 19% more homes to choose from by the end of the year, while agents in the other popular Sunbelt state of Florida, for example, estimate buyers will see 30% more inventory by year-end, according to a HomeLight survey of more than 1,000 top real estate agents across the country.
While sellers retain a strong position in the DFW market and most of the nation, signs of transition abound, according to reports from the surveyed agents. For example, over the last two years, more than 90% of U.S. agents consistently reported a seller’s market in their area. In HomeLight’s recent survey, however, only 51% of agents now describe their current local market as a seller’s market. Just three months earlier, that number stood at 95%.
DFW home inventory supply is now at over two months supply
In DFW, a shift is underway, but it’s not a buyer’s market, said Kelly Boulton, a HomeLight Elite Agent in the Dallas area who is quoted in the report.
“I am seeing more inventory,” Boulton said. “Compared to January 2022, which had two weeks of inventory supply in North Texas, we are now at over two months supply. I am seeing price reductions and fewer buyers. However, I am seeing multiple offers on homes under $400,000 in certain market areas.”
A six-month supply of homes on the market is considered ideal.
Michael Coburn, broker/owner of Allen-based Re/Max Town & Country, said many sellers in DFW have been slow to adjust to the new pricing reality as the market shifts.
"We are still seeing a lot of home sellers who think they can continue to price their homes too high for today's changing market and think that buyers are still willing to pay over fair market value, which is just not the case,” he said. “There are still a lot of buyers in the market looking for houses, but with higher interest rates and more inventory, they are looking for homes that are more reasonably priced. Home sellers are finding out quickly that pricing your home correctly in today's market is much harder than they first thought.”
Will interest rates go up or go down?
Potential homebuyers who already have a home and their mortgage is currently at 3% or less are much less likely to put their home on the market and buy another home at double or more the interest rate they currently have, Coburn added. The good news is there are more options for buyers entering the market, and if rates do come down, they can always refinance, he said.
In this market, the best advice for buyers is to “marry the house, and date the rate,” said Randy Key, a home loan specialist at Churchill Mortgage in Dallas.
“Interest rates go up and down historically, and we're in a period where they went up,” Key said in an interview with the Dallas Business Journal. “We tell a lot of our clients that this might be the best rate we see (in) the next 10 years. It also may be the highest rate we've seen, and they might drop back down by a point or a point-a-half next year."
"You're not married to that interest rate," Key said. "If rates drop to the point where it makes sense, you just do a refinance.”
How North Texas compares to the national housing market
Nationwide, home sellers, on average, accepted offers below their listing prices last month – a further indication of rebalancing in the housing market, according to Re/Max. Across the report's 51 metro areas, the average close-to-list price ratio in August was 99%, meaning that homes sold for 1% less than the asking price. That's down from 101% in July.
In DFW, the average close-to-list price ratio in August mirrored the national rate of 99%. That's down from 101% in July and down from 102% one year ago.