Median DFW Home Price Slips Back to $400,000 as Sales Slump

Local real estate agents say some of their clients have paused as interest rates soared to a two-decade high.

North Texas homebuying activity and prices slumped in September as mortgage interest rates surged to their highest point in more than two decades.

The median price of a single-family home in Dallas-Fort Worth returned to $400,000 in September, a 3.6% fall from this year’s peak of $415,000 during the summer and flat from a year ago, according to the latest report from the Texas Real Estate Research Center at Texas A&M University and North Texas Real Estate Information Systems.

In September, 6,735 homes sold in the area, 13% fewer than in the same month last year. The report includes primarily existing homes but also some new homes sold by real estate agents. It excludes homes sold by builders, who saw a strong summer of sales activity amid a drought of existing homes.

Homes on average sold for 96% of list price and after 44 days on the market in September, according to the report. New listings were down 10% from a year ago but active listings were up 5% as homes sat on the market longer. The metro area had 2.8 months of available home inventory, still far below the roughly six months that would signify a balanced market between buyers and sellers.

On Oct. 5, the average rate for a 30-year fixed rate mortgage reached 7.49%, its highest level since 2000, according to Freddie Mac. Higher mortgage rates hammered mortgage origination volumes in September and caused industry optimism to wane, according to the Texas Real Estate Research Center.

“The normal seasonal downturn in home sales has been magnified by the lack of affordability created by higher home values and higher interest rates,” Matt Kiker, president of the Texas Mortgage Bankers Association, said in a statement provided by the A&M research center. “We expect the slow pace to continue until rates stabilize, which many predict will occur late in the second quarter next year.

“While Texas mortgage bankers do not expect lower interest rates or an increase in housing supply, there are still opportunities for Texas homebuyers.”

Other economists predict continued heightened interest rates through next year, especially considering better-than-expected new numbers from the Labor Department showing the U.S. unemployment rate remained unchanged from August to September at 3.8%, and that employers added a higher-than-expected 336,000 jobs in September.

Todd Luong, a real estate agent for Re/Max DFW Associates in Frisco, has one client who has been thinking about selling her home and moving to a smaller home after her husband’s death, but she found staying in her bigger home is actually more affordable given the monthly payments she would have to pay on another home with a new mortgage loan.

“A lot of buyers that were planning to buy this year, they were waiting for rates to drop,” Luong said. “In fact, rates actually went up when they thought they were going to be dropping, so buyers are getting a little worried.”

Luong said younger buyers especially are struggling to find a home in their budget given the impact of increased interest rates. Some of his clients are first-time homebuyers looking in the Frisco and Plano area and they’re unable to afford monthly payments even with decent jobs, he said.

“They’re pretty sensitive to the rates right now,” Luong said, adding that Plano and Frisco still have fewer existing homes for sale than other parts of the region, further limiting buyers’ options. “It’s been tough. I’ve got some buyers that have put their search on hold right now.”

Amanda Rupley, a real estate agent in Frisco for Compass, said she is seeing multiple offers on some properties while other sellers are having to drop their asking price.

“It’s really all who you talk to,” Rupley said. “I’ve spoken to some agents who are totally panicking because they have nothing going on, and I’ve spoken to agents who feel like they’re drowning because they’re just full of so much business.”

Rupley said the market is still strong but just not where it was during the busiest days over the past few years, when mortgage rates reached all-time lows.

“People are in the mindset of, they marry the house and they date the rate,” she said. “They’re going with intentions of either paying cash, or they’re going in with conditions of knowing that they’re going to be refinancing over the next couple of years.”

Rupley also said investors have slowed their buying dramatically because of interest rates. “From an investment standpoint, it’s hard to justify a mortgage payment, if they’re not cash, with what their allowable rent or even their spread on the flip market can be at the moment.”

Cortney Bailey, a real estate agent for Douglas Elliman in Dallas, said she has two clients trying to make lateral or step-up purchases and willing to pay cash, but they are just waiting for the right house to hit the market.

“The low inventory is what is stopping them from making the move,” she said. “As soon as the right home is available, they’re willing to pull the trigger.”

Source: Dallas Morning News