The housing market in North Texas is experiencing a significant shift, with more homes hitting the market.This is pushing the region’s months of housing inventory to their highest levels in over a decade. However, this surge in inventory does not tell the whole story of the current market dynamics.
Despite the increase in listings, buyers are still snapping up homes at a brisk pace, comparable to last year. This indicates that houses aren’t lingering on the market for longer periods. Moreover, the peak selling season will soon be slowing down, adding another layer of complexity to the market conditions.
Inventory Levels and Market Dynamics
As of the end of May, the Dallas-Fort Worth (D-FW) area had 3.5 months of housing inventory. This was the highest level since November 2012, according to data from the Texas Real Estate Research Center at Texas A&M University, North Texas Real Estate Information Services, and the MetroTex Association of Realtors. For context, a balanced market typically requires about six months of inventory. By doing this, it measures the time it would take to sell all homes currently listed if no new properties were added.
While the increase in inventory suggests a shift, experts caution that the market is far from balanced. “Supply pressures are easing slightly, but there’s still a long way to go,” said Sriram Villupuram, a finance and real estate professor at the University of Texas at Arlington. “That’s not enough.”
Active Listings Surge in North Texas
In May, the D-FW area saw over 25,900 active listings, marking a 51.4% increase compared to the same period last year. This trend of rising listings has continued for three consecutive months, with a 46% increase in April and nearly 36% in March over 2023 figures. The last time North Texas had this many active listings was in September 2019.
Every county in the region experienced a surge in listings. Collin County saw its active listings soar to over 4,100, a nearly 77% increase from last May. Dallas County had 5,567 active listings, a 64.2% increase.
Key Market Indicators
Despite the influx of new listings in North Dallas, key metrics such as median prices and closed sales will be crucial to monitor in the coming months. In May, the median price of a home in D-FW was $410,000, a modest 1.2% increase from last year. In Dallas County, the median price rose to $387,000, up 4.6% annually.
Approximately 9,450 sales were closed in North Texas in May, showing no change from the same period last year. It’s important to note that sales data often reflects market conditions from 60 to 90 days earlier, making it a lagging indicator.
Buyer Activity and Market Pace
Despite the increased supply, buyers are actively purchasing homes. On average, homes in the D-FW area are on the market for 76 days from listing to final close, which is one day less than last May. This rapid turnover highlights the sustained demand, even amidst rising inventory levels.
Interest Rates and Affordability Challenges
Interest rates remain a significant factor influencing the market. The average 30-year mortgage rate in the United States was 6.95% for the week ending June 13, down slightly from over 7% in April and May. The Federal Reserve’s recent decision to hold steady on its key interest rate and reduce its forecast from three rate cuts to just one amid persistent inflation could impact future market conditions.
Additionally, other costs associated with homeownership, such as insurance, have risen. Texas home insurance rates have increased by 54.5% from 2019 through March 2024, according to LendingTree. This increase places additional financial pressure on potential homebuyers.
Looking Ahead at the market in North Texas
“Affordability is still a challenge,” said Justin Landon, CEO of MetroTex. “Demand is remaining fairly constant. Supply is coming up a little bit because sellers are getting off the fences. And now the question is will demand pick up to respond? We’ll have to wait and see what happens with rates and all the rest.”
While the increase in housing inventory is a positive sign for the North Texas market, achieving a balanced market will require continued monitoring of key factors, including interest rates, affordability, and buyer demand. As the market evolves, both buyers and sellers will need to stay informed and adaptable to navigate these changing dynamics.
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