DFW Home Prices Continue to Rise
Higher mortgage rates haven’t caused local home prices to plummet.
Dallas-Fort Worth home prices increased for the fourth consecutive month in May, continuing a turnaround of prices back toward June 2022′s peak.
Local home prices grew 1.6% from April to May and 4.1% since January, according to the S&P CoreLogic Case-Shiller home price index, a much-watched measure of the national housing market and 20 local markets.
DFW’s hike followed an 8.5% decline over the seven months following June 2022′s all-time peak. National prices also climbed for four straight months from February to May.
It’s a return to what looks like traditional seasonality after more than two years of consecutive month-to-month price increases in the region that drove homes prices up 58% from March 2020 to June 2022, according to the Case-Shiller index. U.S. prices increased 43% during that period.
“Home prices in the U.S. began to fall after June 2022, and May’s data bolster the case that the final month of the decline was January 2023,” said Craig Lazzara, managing director of S&P Dow Jones Indices. “Granted, the last four months’ price gains could be truncated by increases in mortgage rates or by general economic weakness.
“But the breadth and strength of May’s report are consistent with an optimistic view of future months.”
The median single-family home price reached $415,000 in June, according to North Texas Real Estate Information Systems and the Texas Real Estate Research Center at Texas A&M University. In March, Dallas-Fort Worth prices saw their first year-over-year decline on the Case-Shiller index since February 2012. Local prices in May were still down 3.8% from a year before, along with nine other cities included in the Case-Shiller index.
“While the annual decline reflects price drops that occurred in 2022, recent above-average price gains indicate an inflection ahead,” said CoreLogic chief economist Selma Hepp.
The Case-Shiller index is a three-month moving average that compares sales-price changes of specific properties over time. While it is a couple of months behind current market conditions, the index’s price estimate is considered more accurate than data from agents, which can be influenced by the type of properties that are selling each month.
Chicago, Cleveland and New York reported the highest year-over-year gains among the 20 cities included in the index in May, which were split in half between lower prices and higher prices from a year before.
“Regional differences continue to be striking,” Lazzara said, noting that it has been five years since a cold-weather city saw the biggest change year over year. Since May 2018, Las Vegas, Phoenix, Tampa and Miami had been the top-ranked cities.
Hepp said the rest of 2023 for the national housing market will depend on mortgage rates and the availability of home inventory.
“As a result, 2023 homebuying activity may end up being the slowest in about a decade,” Hepp said. “And while home prices in early months of this year surprised with their rally, monthly gains are likely to plateau to historical averages as mortgage rates continue to challenge affordability in many markets.
“Nevertheless, demographics, equity-rich baby boomers, and strong job markets will ensure housing demand outpaces inventory availability and home prices continue peaking.”
On Wednesday, the Federal Reserve is widely expected to again raise its key interest rate, after briefly pausing its aggressive campaign to get inflation in check. The projected quarter-percentage point hike would set the federal funds rate between 5.25% to 5.5%, its highest mark since 2001 and the 11th increase in a year and a half.
Source: Dallas Morning News