Dallas Housing Market Update January 2024

Hey there, Dallas-Fort Worth

It’s a new year and I’ve got new data!

In this month’s real estate market update, in addition to the month-over-month sales numbers, we’re talking about how the start of this year compares to the start of last year and if we can expect a better real estate market this year.

I’ll explain why we’ve seen rates go up when everyone predicted they’d go down, along with when we might see them go down again.

I’ll tell you about Fannie Mae’s surprising interest rate prediction along with a look at how Dallas-Fort Worth compares to the nation when it comes to affordability.

And be sure to read to the end where I bring up some of the upcoming big economic reports you should pay attention to and how they’ll affect rates.

Alight, let’s get to it.

First. How does the start of this year compare to the start of last year?

In our market, January is typically the lowest month of the year. It consistently ranks as the lowest for prices and number of sales.

The question all of us Realtors, along with anyone who is considering a sale in this market is asking is, ‘Will 2024 be better than 2023?’

The reason we want to know is because 2023 was pretty rough for the industry. We hadn’t seen sales numbers this low since 1995. Home sales were down 19% from the year before and that’s after another drop of 18% in the number of sales from 2021 to 2022.

How many homes should be selling every year? Well, we typically saw about 5.5 million sales in the five years before the pandemic. So with only 4.09 million sales last year, we’re about 26% off of normal trends.

Some argue that the reason we had so few sales is because there wasn’t enough inventory. I’m not sure who performed or who responded in that poll, or where that poll is published, but my anecdotal evidence from representing buyers is that so much came down to rates. We can also look at mortgage application data to see that applications were down. 

If it were truly an inventory issue, then we’d still see a low time on market. In April of 2021, we saw a median time on market of 6 days. That’s what you see when there’s little inventory. Now we’re seeing a median time on market of 36 days.

Okay, so we still haven’t answered the question, will this year be better?

It looks like it and by my calculation, we could see 10% growth in sales just in January alone.

Here’s how I came up with that number.

I took a look at the past four years of data to see what our pending home data looked like in December and then compared that to the actual sales in January. Since pending data gives us a leading indicator of closed sales, this seemed like a logical first place to start.

In December of 2019 we had 7,363 pendings. In January of 2020 we had 7,144 sales. So we had a 97% close rate.

In December of 2020 we had 8,732 pendings. In January of 2021 we had 7,951 sales. So we had a 91% close rate.

In December of 2021 we had 8,945 pendings. In January of 2022 we had 8,149 sales. That gave us another 91% close rate.

In December of 2022 we had 6,191 pendings (whoa, notice the big drop). In January of 2023 we had 5,794 sales. So we had a 94% close rate.

Over those four years, that comes out to an average close rate of 93.25%. If I use that same percentage and apply it to the number of pending sales we had in December 2023, which was 6,908 pending sales, that means we could see 6,908 sales in January.

So notice that our pending data was up year-over-year by 11.5%. That’s a sign we’re doing better. And that’s with slightly higher interest rates in December 2023 than we had in December 2022.

In December 2022, weekly average mortgage rates ranged from 6.27% up to 6.49%. In December 2023, that range was from 6.61 to 7.03%. 

Now this is just a wild guess on my part, but I think we have some buyer fatigue to blame. This is the group of buyers who were holding out for better rates but have grown tired of waiting and are accepting current rates as the new normal.

So not only does my estimate show that we could have a 10% increase in year-over-year sales in January, but with interest rates predicted to go down this year (albeit we’re not sure when but I have some thoughts), and buyers ready to get on with their lives, I think we’ll likely see more sales this year than we did last year.

As far as pricing goes, I think we’re going to see seasonal fluctuations where they rise in the spring and summer months and fall in the winter. As far as how much they’ll go up, Fannie Mae’s Home Price Expectations Survey predicts we’ll see prices go up 2.4% in 2024. However, that’s a national average.

The National Association of Realtors took a look at the 100 largest U.S. metros and identified Dallas-Fort Worth as being the second top market with the most pent-up housing demand.

If that is true, I think we could see prices appreciate more than 2.4% in DFW this year.

So, will this year be better than last year? Well, more sales and price appreciation? Yeah, I think it will be better.

Next topic - why have rates gone up lately when it was predicted they’d go down? Well, you should go back and watch my 2024 real estate market predictions video to get a full explanation on how the mortgage markets look at interest rates. But the quick overview is that the mortgage markets react in advance. If it looks like the FED is going to drop the Federal Funds rate, they’ll go ahead and drop mortgage rates in anticipation of what’s predicted to happen in the future.

Well, that was all well and good, but then CPI data came out and the number was higher than expected. Which means the economy didn’t cool down as much as it was predicted to. Oh, and we had a jobs report that came out higher than what was expected too, so that good economic news made the mortgage markets react and go, 

‘hey, maybe we’re not slowing down fast enough for this ‘soft landing’ the FED is looking for and rates won’t start going down anytime soon. Better bring them back up a bit until the economy cools a little more’

So, that’s why rates have gone up a little, but we’re still under 7 which is great. 

As far as when we might see them go down, well, it’s likely going to be sometime in the summer or even later. And a few months ago I would’ve told you they’d start going down in the spring, but I think the FED wants to see some consistent softer economic reports before they feel like they can relax on their monetary policy.

That’s what I think, but what about the experts? Well, Fannie Mae just put out a surprising interest rate prediction. 

Fannie Mae is the Federal National Mortgage Association. They are a leading provider of mortgage financing in the U.S. So they know some stuff about mortgages.

They predict mortgage rates to decline in 2024 and end the year below 6 percent.

I’m dubious, but, okay. I mean, that would be nice. I’ll take it. But a lot of dominoes have to fall just perfectly to hit that goal. And the economy has to slow down A LOT.

While going through all of this news and all the reports that have come out recently, there was a little tidbit that struck me as interesting. 

The National Association of Realtors reported that for December, the median sales price for a home in the U.S. was $382,600. But the median price of a home in DFW was $365,000. That means we’re affordable. Even after all of the increases in home prices. Even after the population surge we’ve had over the last few years. We’re still affordable.

So, again, back to the pent-up demand and attractiveness of our metroplex, I think we’ll see a better market this year.

Okay, so how did the market actually perform in December? Let’s look at the numbers.

The median sales price was $365,000. That was a 1.3% increase from a year ago. 

New listings went down month over month but up 13.9% year over year. There were 8,380 new listings to hit the market last month.

The overall number of homes for sale went down again month-over-month to 27,984 homes. That’s a 2% increase from the same time last year. 

We had an uptick for closed sales in December month-over-month to 7,653 sales. But it was 7.2% down year-over-year. 

Our months of inventory dropped month over month and we now have three months of inventory. Year-over-year, however, we had a 7.1% increase. 

The median time on market before going under contract is up to 36 days. That’s higher than November when the median was 29 days and it’s up from December 2022 when the median time on market was 34 days. 

Our median sales price per square foot for DFW is up 1.1% 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 went down again. Homes are now selling at 95.9% of the original asking price. 

The takeaway…

This spring could be an improvement from last spring with more buyers and sellers in the market. The good news for buyers is there will still be negotiating room on pricing and repairs for most listings. The good news for sellers is there should be an uptick in traffic to get your listing sold faster.

And by the way, we have some big economic reports releasing after the recording of this video. The advanced estimate of the 4th quarter and year 2023 GDP will be announced. 

We’ll get a report on new residential sales to see if sales of new single-family houses are up or down. 

And a big number we’re watching, the Personal Consumption Expenditure Price Index, allows us to see how the economy is performing month to month. This is also what the FED likes to look at when gauging inflation. The estimates are that there will be a growth of .2% month-over-month and then 3% for the year. Anything higher than that will signal to the FED that the economy isn’t cooling as much as they anticipated, and that does not bode well for any decrease in the Federal Funds rate any time soon.

So, be sure to subscribe so you can see how these reports affect the market in February and what they’ll likey mean for interest rates in the short-term.

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.