Despite a slowdown in activity, prices rose faster in DFW than in any of the other major metropolitan area in 2022.
Dallas-Fort Worth is proving to be more resilient to the recent slowdown in homebuying than other parts of the state.
While housing supply increased throughout Texas in 2022, Dallas-Fort Worth emerged with the tightest inventory of the state’s largest metro areas with 2.2 months of homes available at the end of the year, according to a new report from Texas REALTORS®.
A year before, the Austin market was the tightest in the state with just over half a month of supply, but D-FW was not far behind at 0.8 months. A balanced market between buyers and sellers would have about six months of supply available.
Statewide, housing inventory rose from 1.2 months at the end of 2021 to 2.7 months at the end of 2022.
With the shortage of homes to buy along with continued job growth bringing people to the region, home prices increased more in D-FW last year than in the other major Texas metros.
D-FW’s median price rose 15.6% to $400,000. Austin home prices grew the least by 11.2%, but the median price of a home in North Texas is still $102,000 less than in the Austin area.
Dallas-Fort Worth real estate agents sold 97,119 homes in 2022, a 12.7% decrease from 2021, according to the report. That was still the second most sales among the four major Texas metro areas, behind Houston.
The number of homes sold statewide in 2022 decreased 11.3% from a year before with 367,472 sales after two years of growth, but was still the state’s third-highest on record.
Lower unemployment rates, increased per-capita income and continued population growth contributed to a strong seller’s market in most areas of Texas as both supply and prices increased, the real estate organization said.
“The economic conditions throughout the state resulted in another year of high demand, while the report data indicates that market dynamics have largely leveled out after the 2020 pandemic,” Texas Realtors chairman Marcus Phipps said in a statement.
The average rate for a 30-year mortgage reached its lowest point in history at 2.65% in 2021, then soared to its highest level in two decades above 7% in 2022, according to Freddie Mac. This caused a spike in buyers’ monthly payments, causing prospective buyers to hold back on purchasing a home.
“We’re still seeing median home prices climb, but other factors such as higher mortgage rates caused a slight decrease in the number of home sales last year,” Phipps said. “We’re also seeing accepted offers come much more in line with listing prices rather than the bidding wars that had been common in many Texas markets.”
The region saw a slight bump in sales in February, local housing numbers show, but buying activity this year will depend on what happens with mortgage rates.
Jim Gaines, an economist with the Texas Real Estate Research Center at Texas A&M University, expects the federal funds rate to plateau in 2023, impacting mortgage rates and construction lending rates.
“The Texas economy is strong, but with higher construction and mortgage lending rates, we expect sales to revert to normal levels,” Gaines said in a news release from Texas Realtors. “Supply will still be limited as indicated by low months of inventory. “Additionally, work-from-home arrangements seem to be locked in, minimizing one of the reasons people choose to move. We may see this factor begin to reduce the rate of housing transactions across Texas.”
Source: Dallas Morning News