After more than a decade of steady year-over-year growth and unprecedented appreciation following the start of the pandemic, Dallas-Fort Worth home prices finally declined this year following a rapid rise in mortgage rates.
The region’s home prices fell 1.5% in March from a year before, the first year-over-year decline in the metro area since February 2012, according to the latest reading of the S&P CoreLogic Case-Shiller Index released Tuesday.
D-FW prices have fallen 7.5% since their peak last June but increased slightly from February to March.
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 home sales data from agents, which can be influenced by the type of properties that are selling each month.
The median price of a single-family home in Dallas-Fort Worth declined 5% year over year in April to $404,450, according to the latest report using data from Realtor associations, which also showed transactions were down 8% from a year before with 7,429 transactions.
Miami, Tampa and Charlotte saw the largest year-over-year gains of the metro areas on the Case-Shiller index, but none of them saw double-digit increases as some did in previous months.
U.S. home prices as a whole increased slightly month-over-month in both February and March, which S&P managing director Craig Lazzara said may signal an end to the continued decline in home prices that started last June.
“That said, the challenges posed by current mortgage rates and the continuing possibility of economic weakness are likely to remain a headwind for housing prices for at least the next several months,” Lazzara said in a statement.
Dan Handy, an economic data analyst for Zillow, said that on a national level, listings are going under contract after about a week on the market and a large share of homes are selling above the asking price.
“With home values quickly appreciating, interest rates now at their highest levels in over 10 years, and record low for-sale inventory this spring, these are not the most favorable conditions for prospective buyers, to say the least,” Handy said. “While these challenging conditions might be expected to drain the pool of buyers, and may still do so eventually, there are signs the market remains very competitive.”
Home selling activity and prices historically dip during the first few months of the year and tick back up in the spring, a trend the Case-Shiller report suggests has returned this year.
Adam Perdue, an economist with the Texas Real Estate Research Center at Texas A&M University, said he will be watching to see if prices continue the typical trends through the summer months when buyers are more likely to make voluntary moves such as buying a larger home.
This year, buyers with low mortgage rates wanting to upgrade may choose to stay in their homes and avoid higher rates.
“Right now, I’m very surprised at the fact that we’re following the seasonal pattern, because of the high interest rates,” Perdue said in an interview. “It’s really the summer months that are going to be key.”
The A&M economists expect Texas prices to stay close to where they were last year and possibly increase or decrease slightly, according to Perdue.
The Texas market is returning to more normalcy compared to the rapid run-up seen from 2020 to 2022. Prices have risen 35% to 40% since the start of 2020, while the center at that time expected prices would have risen 10% or 15% in the same period, he said.
The center anticipates that the coming years will mirror the stagnation in the Texas market during and after the 2008 financial crisis.
“From 2007 to 2013, home prices just stayed flat for a while,” Perdue said. “That’s what we’re expecting, just relatively nominal, flat pricing for a few years until all of the underlying economic growth for Texas can catch us up to the pricing that we’ve ended up at.”