Record-low mortgage rates, a wave of millennial homebuyers and record-low inventory pushed the North Texas housing market into a two-year frenzy after the start of the pandemic.
That finally ended in the spring, largely due to a steep climb in mortgage rates engineered by the Federal Reserve. The average rate for a 30-year home loan soared from 3% to a high of more than 7% in just a year, boosting buyers’ monthly payments and stalling home searches.
Existing home sales in November saw a 30% year-over-year decline, a drop not seen since immediately after the Great Recession, according to the latest data from the Texas Real Estate Research Center at Texas A&M University.
Longtime A&M economist Jim Gaines expects the number of existing home sales to continue to fall. Gaines and other experts wouldn’t say the market is headed toward a crash, but rather that it’s returning to pre-pandemic inventory levels and sales numbers.
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“There’s no doubt about it, the market is slowing down from a very high peak,” Gaines said.
Homebuilders also saw a dramatic decline in sales that led them to slow construction of new homes and opt out of buying more land. In the third quarter, D-FW saw the largest year-over-year decline in home starts in almost a decade, according to Dallas-based housing analyst Residential Strategies.
“I think that it’s going through a swoon right now,” Residential Strategies principal Ted Wilson said. “But there are a lot of forces that are going to keep it buoyed so that it doesn’t crash.”
The region’s median sale price has dropped almost 9% since its peak of $435,000 in June, but it would take a much bigger blow to get it back to March 2020′s median price of $283,000. Gaines said prices could see a slight year-over-year decline in 2023 but will likely stay close to where they are.
Some sellers are having to make compromises in contracts and reduce prices, said Tiffany Todd, a real estate agent with TDRealty in Mansfield.
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