Dallas-Fort Worth is cooking up a record year for home sales and prices, but there are signs that the residential market is cooling from a boil to a simmer. "On a macro level, the market is definitely cooling down, but we're talking about going from extreme hotness to, like, still hotness," DFW Opendoor General Manager Sharon Brown said in an interview with the Dallas Business Journal. "Relative to last the last few months, the market is cooler," Brown said. "But relative to last year, the year before and the years before that, it's still super hot. Even though it's cooling down, that doesn't mean that it's a cool market."
The DFW market is cooling because more inventory is coming on the market and the volume of homes sold has decreased over the last three months, Brown said. Sales prices are also declining a tad, she said. "It's still pricey," she said. "It's still a seller's market, but because of the inventory lift, because there's more supply on the market, the price is slowly coming down — not tremendously, but slightly.
Home prices in DFW have risen roughly 17% in 2021, and they're likely to rise another 4% to 5% in 2022, James Gaines, economist for the Texas Real Estate Research Center at Texas A&M University, said in a virtual meeting of the MetroTex Association of Realtors. Gaines forecast total existing home sales for DFW to increase by 3% in 2022.
Dallas-Fort Worth new home sales and median prices are running at record levels, but a disrupted material supply chain and limited construction labor pool are causing it to take longer to get houses built and closed. North Texas homebuilders initiated housing starts on 14,216 units in the most recent quarter, eclipsing the third-quarter 2020 pace by 1,277 units and up 9.9% year over year, according to statistics released today by Dallas-based Residential Strategies Inc. The annual start rate, which includes the fourth quarter of 2020 through third-quarter 2021, has now climbed to 58,625 units — up 35% year over year, according to the housing market analyst.
"Even with higher prices there continues to be solid demand for new houses," said Ted Wilson, principal with Residential Strategies. "The biggest challenge for builders today is that, with limited construction labor and a disrupted material supply chain, it is taking much longer to get houses built and closed." Despite the delays, builders set a record for closings in the most recent quarter at 11,985 units, up 3.5% year-over-year. The annual closing rate stands at 45,574 units, up 13.7% year over year.
The cost and shortage of construction labor has been problematic for builders, said Cassie Gibson, Residential Strategies' senior vice president. Lumber future prices peaked in May 2021 and have subsided since, but supply chain issues persist for many other components used in housing construction, causing higher prices to persist for builders as they determine their true input costs, Gibson said.
New home demand in North Texas has soared over the last year and a half because of a shortage of existing homes and surplus of people moving to the area.