DFW Housing Market Heads Into 2024 With Hope for Improvement
Home sales and prices were lower in North Texas in 2023 because of higher mortgage rates.
Lower mortgage rates top the housing sector’s wish list for 2024.
The biggest interest rate run-up in more than two decades depressed home sales this year and slammed the brakes on house price increases in North Texas after years of huge gains.
With the Federal Reserve signaling a halt to interest rate hikes, housing industry leaders are more optimistic about the year ahead.
“Home sales after two straight years of difficulty will begin to rise next year,” said Lawrence Yun, chief economist with the National Association of REALTORS®.
Yun is predicting home mortgage rates will decline in 2024, after topping out near 8% this year.
“I believe average mortgage rates next year will be in the mid-6% range,” he said.
That should boost homebuying and housing affordability in North Texas and around the U.S.
The REALTORS®’ association is forecasting that the Dallas-Fort Worth area will be one of the country’s top housing markets in 2024, second only to Austin.
“The demand for housing will recover from falling mortgage rates and rising income,” Yun said in a statement. “In addition, housing inventory is expected to rise by around 30% as more sellers begin to list after delaying selling over the past two years.”
Existing home sales in the Dallas-Fort Worth area were down 7% through the first 11 months of 2023 compared with the same period last year. And median sales prices for houses sold by real estate agents dropped 2% year over year.
North Texas homebuilders are hoping that a dip in mortgage rates in 2024 will bring more buyers to their doors.
“If rates drop, we could have a really active market,” said Ted Wilson, principal with Dallas-based housing analyst Residential Strategies. “If they drop below 7%, it will really help.”
Wilson is estimating that local builders will start as many as 48,000 houses in 2023. Through the third quarter, DFW home starts were down about 14% from the same period last year.
“There is pent-up demand for houses but that only will be unlocked if rates come down lower,” he said. “Affordability is a huge challenge.”
Fueling homebuying in North Texas is continued near-record population gains and strong job growth.
The DFW area grew by about 170,000 residents last year. And North Texas had added almost 150,000 jobs during the 12 months ending in October.
“As long as people have jobs and income, the demand for housing is still there,” said Jim Gaines, longtime economist with the Texas Real Estate Research Center at Texas A&M University. “Home sales statewide are down a few percentage points — not as much as you’d have thought.
“Prices have been more or less flat,” Gaines said.
And with only about a three-month supply of existing homes listed for sale in North Texas, inventories remain tight.
Gaines is also forecasting more attractive mortgage rates in 2024.
“The market can live with mortgage rates in the 6′s and 7′s,” he said. “If it gets above 8%, it’s a problem. But I don’t see that happening.”
Source: Dallas Morning News