DALLAS — Read this story and more North Texas business news from our partners at the Dallas Business Journal
The housing market in Dallas-Fort Worth is shifting toward balance after years of sellers having the upper hand. The swing in North Texas echoes a national trend that seems to favor buyers, despite persistently high mortgage rates.
Home prices have fallen in most North Texas counties from where they were a year ago and inventory was up by double-digit percentages in June, according to an analysis by M&D Real Estate. The Rockwall-based firm pulls its data from multiple listing services stats gathered by North Texas Real Estate Information Services.
The median home sale price in Dallas County was $367,500 in June, a 3.9% decrease from $382,250 in June 2023. Collin County's median price was $506,528 in June, a drop of 6.2% from $540,000 a year ago, according to NTREIS data.
In Tarrant County, the median home price was $358,250 in June, essentially unchanged from $358,125 in June 2023. The median home sale price in Denton County was $468,250, a 1.4% decrease from 475,000 in June 2023.
Median prices fell 3.9% in Rockwall County, 5.1% in Kaufman County and 2.7% in Hunt County compared with June 2023.
Inventory, which measures the supply of homes for purchase, keeps rising in Dallas and surrounding counties, indicating a shift to a more a balanced market. As a rule of thumb, less than three months of inventory is typically considered a seller’s market, while six months is considered balanced between supply and demand. More than that is entering buyer’s market territory.
In June, Dallas County saw inventory jump 60.9% from a year ago to 3.6 months. Collin County had the same 3.6-month inventory level, which was up 50% from June 2023. Inventory was up 36% year-over-year to 3.4 months in Denton County and up 39.1% to 3.2 months in Tarrant County, the NTREIS data show.
Inventory veered even closer to a buyer's market in more far-flung locations. In Rockwall County, inventory was 5 months in June, a year-over-year increase of 37.1%. Kaufman had 4.8 months of inventory and Hunt had 5.3 months, up 28.9% and 39.5% respectively.
Overall, inventory across DFW was nearly 3.8 months in June. The last time it was that high was November 2012.
The surge in supply is good news for homebuyers as they are now starting to see more homes to choose from after two years in a tough market.
However, sellers can still attract multiple offers by properly pricing homes and strategically offering incentives, said Danny Perez, founder and managing director at M&D Real Estate.
"Sellers are still trying to get that premium pricing, but they’re getting seller fatigue and buyers are starting to get wiser and making better offers that are affordable because ultimately the problem with DFW is not demand but affordability,” Perez said.
Buyers are making offers of $50,000 or even $100,000 below the asking price and getting deals done, causing the decline in prices from May to June, Perez said.
"I think we really need to get into double-digit [drops in prices] before affordability and transactions begin to pick up to a more normalized pace for DFW," Perez said.
Homes have also been sitting on the market for longer. At an average of 37 days, homes in Dallas County have lingered with for-sale signs 23% longer than a year ago. Tarrant County saw homes sit on the market for 39 days on average, an increase of 18% from a year ago. In Denton County, the average was 37 days, up 6% year over year. Collin County saw homes linger on the market for 39 days, an 8% year-over-year increase.
In Rockwall County, the time on market was up nearly 12%, to an average of 57 days. Time on market was up 7% in Kaufman County to 64 days and was up 7% in Hunt County to 58 days.
Perez thinks a more "normal market" could beginto emerge in perhaps next year's first quarter.
"What that means is that prices are going to have to come down," he said. "I think we’ll get some relief on interest rates but it’s not going to be enough for the consumer to afford it. It’s got to be the prices."
Julie Lynch, director of the Herbert D. Weitzman Institute for Real Estate at the University of Texas at Dallas, agreed that the market is moving to more balanced territory.
"My sense it there is pent-up demand due to 2023 interest rate environment, and higher home prices. Home affordability is challenged by the sharp and dramatic increase in home prices from 2020 to 2022. If interest rates return to a more normalized rate of 6% or below this will entice potential home buyers to purchase," Lynch said in an email.
It's clearly a market in transition, and Realtors across DFW are seeing the changes play out in real time. Jansen Klefeker, an agent with Compass, said while homes generally spend longer on the market, but the duration varies by price point.
Klefeker said homes under $500,000 are sitting on the market longer but homes he's listed for more than $1 million tend to have more offers and contracts being placed.
"It's not like a bubble bursting or anything like that, but we're not seeing multiple offers on most of our homes," he said. "We're not seeing competitive situations on most of our homes. We're seeing buyers coming in asking for concessions and typically asking for a price reduction in their offer and not going in at full value."
Nationally, existing home sales fell about 5% from May to June but the median sales price climbed to the highest level ever recorded for the second consecutive month, according to the National Association of Realtors.
"We’re seeing a slow shift from a seller’s market to a buyer’s market," NAR Chief Economist Lawrence Yun said in a statement. "Homes are sitting on the market a bit longer, and sellers are receiving fewer offers. More buyers are insisting on home inspections and appraisals, and inventory is definitively rising on a national basis."
The new home picture
A larger inventory of existing homes can cause challenges for homebuilders as buyers torn between brand new homes and older ones have more options in the resale market. Yet incentivized interest rates from builders continue to make new builds an attractive option for buyers, especially first-time homebuyers.
New home sales in North Texas show mixed results in June, said Ben Caballero, founder and CEO of HomesUSA.com. The Dallas-based company tracks new homes sold through the MLS in DFW and the Austin, Houston and San Antonio metro areas.
The number of DFW new home sales flattened last month while homes sales sped up and the average price fell, according to the firm's latest monthly Texas New Home Sales Report, released July 23.
According to June MLS data, the three-month average of new home sales in DFW was 1,954, slightly lower than 1,986 in May.
Caballero sees difficulties ahead for homebuilders as new home inventory continues to accumulate while prices are falling and interest rates remain in the 6-7% range.
"That is a challenge," he said.
June's pending sales, an indication of future sales, dropped by about 6% as builders work to balance production with moderate demand caused by the higher mortgage rates, Caballero said in the report.
Many North Texas buyers are paying less for a new house than they were earlier this year, according to the HomesUSA report. Dallas-Fort Worth posted an average sales price in June of $482,048 versus $486,197 in May. Year over year, DFW’s average new home prices have fallen a little more than 2%.
