The housing market in the Dallas-Fort Worth area is currently placing pressure on both buyers and sellers in a rapidly changing economic environment.
While median sales prices are on the decline, more expensive homes are not selling as quickly as they once did.
Homes in the region are staying on the market for approximately 11 and a half days longer compared to last year.
As a result, overall sales are down, prompting some potential sellers to consider renting out their properties instead.
Economic uncertainties, persistent high prices, and interest rates around 7% have left many buyers feeling sidelined.
“This is going to be a difficult year for the buyers,” stated Sriram Villupuram, a real estate and finance professor at the University of Texas at Arlington.
Villupuram noted that sellers have several options.
They could either list their homes for sale or choose to rent them out for the time being, creating a scenario where navigating the market is tough for both parties.
For buyers willing to search, however, there may still be good deals to be found.
Homebuilders currently have a larger inventory of finished speculative homes available, accompanied by attractive incentives.
Some homebuilding firms are facing challenges and have begun to lay off employees as the market shifts.
Several key metrics reveal the current state of the Dallas-Fort Worth housing market.
According to the real estate website Redfin, home prices are expected to decline further by the end of 2025, with Dallas witnessing one of the fastest rates of decline in median home prices.
In fact, the Dallas area has seen a 4.6% drop in home prices over the past year, ranking as one of the top metros to experience such declines, just behind Oakland, California, and Jacksonville, Florida.
The cooling housing markets in Texas and Florida have been attributed to a combination of increased homebuilding, rising insurance costs, and extreme weather events.
Supporting these trends, other reports indicate similar price movements.
The Case-Shiller national home price index shows a minor decline in home prices in Dallas, with a year-over-year decrease of less than 1%.
Among the 20 major metros tracked, only Tampa reported a larger decline.
The index, which considers a three-month moving average to measure changes in sales prices over time, serves as an accurate indicator of market trends.
Data from Texas A&M University’s Texas Real Estate Research Center, the MetroTex Association of Realtors, and other local sources show that the median price of a home sold via Multiple Listing Service (MLS) was $399,000 in May, reflecting a decrease of 2.2% from the previous year.
Despite falling median prices, other metrics suggest that homes are taking longer to sell.
According to data from the MetroTex Association of Realtors, homes in the Dallas-Fort Worth area were on the market for an average of 86 days, 11 days longer than last May.
Moreover, the housing inventory in the region has risen to 4.7 months, the highest level recorded since July 2012.
This statistic tracks how long it would take to sell all homes on the market at the current sales pace, and experts consider an inventory level of five to six months to be balanced between buyers and sellers.
Active listings have increased significantly, reaching 35,555, which is a 37.2% jump from the previous year.
In terms of closed transactions, there were 9,195 in May, marking a 2.5% decline from last year.
This data suggests that buyers are predominantly seeking lower-priced homes, as Villupuram noted.
He further elaborated that people are accepting the reality of high interest rates, realizing that they are unlikely to decrease as previously predicted.
Consequently, many buyers are choosing to settle for smaller and more affordable homes, while noting that the market has not yet undergone a correction.
Emerging trends among buyers and sellers alike have been observed by real estate agents and market researchers who closely track Texas’ home industry.
For instance, Todd Luong, a RE/MAX agent in Frisco, has seen that more potential buyers and sellers are increasingly comfortable exploring the rental market.
A significant number of would-be sellers have witnessed their home equity rise over recent years.
Additionally, since their mortgage rates are lower, sellers feel less urgency to sell quickly.
Many are hesitant to significantly reduce their asking prices and prefer to hold on to their properties as rentals instead.
Some sellers are even opting to double-list their properties, presenting them as both for sale and for rent.
“My experience shows that a few years ago, this was virtually unheard of,” Luong remarked, emphasizing the drastic change in seller mindset.
Jim Fite, president and CEO of Century 21 Judge Fite Co., also confirmed that homes in the higher price range are experiencing longer sale times compared to previous months.
He pointed out that properties priced under $700,000 are still moving quickly in contrast.
Increasingly, sellers are seeking to rent their homes, demonstrating a shift in market behavior.
Rental popularity has surged in North Texas over recent years, as illustrated by data indicating that D-FW enjoyed four of the five fastest-growing suburban rental markets in the nation between 2018 and 2023, per an analysis by Point2Homes.
While single-family rents in Dallas have also declined, Cotality’s Single-Family Rent Index noted a 0.4% drop in pricing year-over-year in April, marking the second consecutive month of decreasing rental prices.
This dip is attributed to a dramatic increase in available multifamily rental units in the region, which has helped shift leverage back to renters.
As more new multifamily units hit the market and are leased out, rents may stabilize in the future, particularly as potential home buyers remain in the rental market and migrate towards single-family rentals as a desirable alternative to apartments.
Despite these trends, Fite acknowledges that prospective buyers are not flooding into the rental market en masse.
“There are instances where I’ve had to lower the rent in some cases, albeit very few occasions,” he mentioned, marking the current rental atmosphere as notably softer than it was a few years back.
Some of Luong’s clients have paused their home searches, although others are capitalizing on opportunities to find lower-priced deals.
One of his recent clients successfully secured a home with an accepted offer $30,000 below the asking price, illustrating a more negotiable market.
With builders facing their own set of challenges, Ted Wilson, who leads market research firm Residential Strategies, highlighted the current state of the building sector.
As of the end of March, there were 11,574 finished vacant homes, showcasing a 4.3% increase from the end of the previous year.
This excess inventory has prompted builders to offer price discounts and buyer incentives, which have in turn affected their profit margins.
Builders continue to aggressively construct speculative homes—those built without a specific buyer lined up—aimed at both maintaining workforce engagement and capitalizing on opportune market conditions.
Wilson indicated that builders are managing their inventory and profit strategies more effectively than in previous downturns.
Unlike the crash of 2008, builders have room to negotiate prices and still sell homes in various neighborhoods, he noted.
Despite a predicted decrease in new home starts—an estimated 46,500 homes expected to begin construction in 2025, the lowest since 2019—this year is still projected to rank in the top ten for new home starts since 1990.
Looking ahead, market experts Villupuram, Fite, and Luong agree that without a change in interest rates, conditions are unlikely to shift significantly throughout the summer and remaining months of the year.
As of June 26, the average 30-year mortgage rate stands at 6.77%, demonstrating stability with minor fluctuations.
Fite summarized, “We are where we are unless we have an interest rate change that makes a difference.”
Villupuram echoed this sentiment, stating that buyers and sellers will continue to encounter challenges until interest rates decrease.
“It’s going to be rough,” he said, emphasizing the tough road ahead for the market.
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