Dallas Housing Market Update February 2024

Hey there, Dallas-Fort Worth

In this month’s real estate market update, we’re talking about how CPI data is making life difficult right now. I’ll let you know if my market predictions from last month are coming true, we’ll talk about where investors are going and the buyer pool that’s most at risk. And of course, we’ll take a look at the actual sales data from January to see how the DFW market performed and where it might be headed.

And be sure to stay to the end because I also go over the eight markets of DFW that saw 20% or greater year-over-year median price growth. Yes, TWENTY percent. And there’s one market that was almost at 43%!

So, let’s get to it.

While the CPI 12-month growth of 3.1% in January was down from the 3.4% we saw in December, it was higher than the projected gain of 2.9%. And this teeny tiny difference made a big impact.

If you recall, at the very end of December, rates when down quite a bit to 6.65% when the markets thought the FED would start decreasing the Federal Funds rate at the beginning of this year. Because if you follow my channel, you will know that the mortgage markets react in advance of what they think will happen in the near future. The FED gives out these little signals that indicate where they might move, and the really smart people in the room read those signals to mean rate cuts could come in the first part of 2024.

Welp, that never happened because the economy has not slowed down as much as the FED needs for them to feel comfortable dropping the federal funds rate. Our employment is still too high and our inflation isn’t cooling off fast enough.

So this means that mortgage rates have gone up a bit. And much to my dismay. And against my prediction of us being done with 7% mortgage rates. Well, mortgage rates did, indeed, go over 7%. And that’s where they are at the recoding of this video. Yeah, they’re averaging 7.14%

Boo.

But here’s the glass-half-full perspective on this. CPI data was still down. That’s actually really good news. This is telling the FED that rates where they are, are working to throttle inflation. There’s no need to increase them. But since inflation isn’t moving down as fast as the FED wants, so, they’re going to keep the federal funds rate here for a while. 

Now last month I did something a little bold. I made predictions. Well, okay I guess I do it all the time as far as predicting where the market might be heading, but last month I decided to get more precise with some actual numbers as opposed to keeping it broad in scope to say whether I think the market is just generally going up or down for buyers and/or sellers.

Last month I estimated we’d have 6,908 Sales in January which would be a 10% year-over-year increase.

Well, here you have it. For our MLS in January we had 6,361 sales which was a 9.8% year-over-year increase. So, I’d call that a pretty close prediction.

Now, if I apply the same logic for predicting if the market will be up or down in February and use the same closing rate formula that worked so well last month, then we actually show that February will have a different year-over-year trajectory than January. That’s because our pending data is down year over year. 

The model shows that we’ll have an estimated 7,264 sales in February which would put us 914 sales under last year, resulting in an 11% decline.

So why the change in momentum?

Well, I think a lot of it has to do with the fact that rates started going back up in January. Based on recent news, I think we could continue to see a pull-back over the next couple of months. 

I still believe that buyer fatigue exists, but with so many predicting rate drops are just a few months away, I can see a buyer saying, “well, we’ve waited this long. A few more months for better rates won’t hurt.”

And since rates aren’t projected to start going down until about mid summer at this point, well, it might be a quiet spring with a big summer boom.

So we’ll check back next month to see if the model is right a second time in a row. You know what they say. Once is a fluke. Twice is coincidence. Three times is a pattern. 

Now moving from rates and over to some news on investors. 

According Redfin, investors bought 26.1% of low-priced homes sold in the US in Q4 2023. It’s the highest share on record since this data has been collected starting in 2000. Overall investor purchases have declined due to high interest rates and home prices coupled with a slowing rental market but at the end of last year investors still accounted for about one of every five home sales. 

In DFW, homes listed for less than $300,000 aren’t flying off the market yet. We still have 2.9 months of inventory for homes $300,000 and below. So investors aren’t crowding out the market just yet.

Alright, now it’s time for the market numbers where we see how the DFW real estate market actually performed in January.

The median sales price was $360,500. That was a 2.8% increase from a year ago. An interesting way to look at this data point is that if you purchased your home in January of last year, based on the median, prices appreciated about 2.8% for you.

And that number surprised me because I have seen some markets with some much larger increases year over year.

And as I tend to do, when something seems interesting to me, I start to go down a bit of a rabbit hole and always find some other interesting data points. So I found myself looking at the major submarkets of DFW to see where we’ve seen the highest median year-over-year increases in the sales price. And you will not believe what I found. At least I can’t. 

There were nine markets that had 20% or more median year-over-year price increases.

In 9th place was Sherman with a year-over-year median sales price increase of 20.8% at $294,450.

8th place was Gainesville coming in at a 21% increase for a median sales price of $242,000.

7th place was Cedar Hill at a 22.7% increase and a median sales price of $337,500.

6th place was North Richland Hills at a 23.2% increase for a median sales price of $23.2%.

5th and 4th places were tied with the City of Keller and the City of Aledo growing 25.5% in median price year over year. That put Keller with a price of $615,000 and Aledo with a price of $630,000.

3rd place was Flower Mount with a 27.7% increase to a median sales price of $709,000.

2nd Place was Weatherford with a 29.6% increase to a median sales price of $460,000.

1st place was University Park with a staggering 42.9% year-over-year median sales price increase to $2,600,000.

Yeah, did you also pick up on the fact that luxury markets are doing really well?

If you’re just learning about the DFW are and want more info on these markets, click on this map link and you can access the map and see homes for sale in each of these areas.

Okay, let’s get back to the rest of the market numbers.

New listings went up month over month and 11.5% year over year to 12,111 new listings.

The overall number of homes for sale went down again month-over-month to 27,851 homes. That’s a 7% increase from the same time last year. 

We had an uptick for closed sales in January when we look at year-over-year data and we were up 9.8% in closed sales to 6,361 sales. 

Our months of inventory dropped month over month and we now have three months of inventory. Year-over-year, however, we had an 11.1% increase. 

The median time on market before going under contract is up to 41 days. That has been steadily creeping up since June of last year. 

Our median sales price per square foot for DFW is up 2.2% from last year and is at $187 per square foot.

The median amount homes are selling for as a percentage of the original asking price is at 96%. 

Our pending sales are up month-over-month, but down 6.3% year-over-year to 8,497 pending sales.

The takeaway…

Sellers, hold on just a little longer. I know demand it isn’t turning around as fast as you’d like for it to but I really do think things will start changing this summer.

Buyers, hold on just a little longer. I know rates aren’t turning around as fast as you’d like for them to but I really do think things will start changing this summer.

Hey there -If we haven’t met yet, I’m Jennifer Shannon and I’m a Realtor and Broker Associate with Keller Williams.

If you’re looking to buy or sell a house anywhere in the DFW Metroplex, my team and I want to be your real estate resource of choice. So if you’re looking for a guide or for someone to help you with the process, or if you think you’ll have any real estate needs in 2024, we can help.

Simply reach out by phone or text at 214-803-4444 or start with an email to me at jshannon@kw.com.