At the peak of home-buying season, there is no shortage of house-hunters, but sales are sluggish as the market is shifting in favor of buyers.
Industry experts continue to point to affordability as a chief reason for the softer sales. Homes priced at $500,000 and above are taking the biggest hit, with properties taking longer to sell and price reductions becoming prevalent.
“We’re seeing a cooling off, but this is nothing to be concerned about,” said Moiri Brown, president of the Greater Fort Worth Association of Realtors and branch manager of Coldwell Banker Residential Brokerage in Fort Worth. “The market is coming back into balance where it needs to be.”
A variety of industry indicators show that the Dallas-Fort Worth area remains a strong market for new and existing home sales, with the Fort Worth and Tarrant County enjoying a sales advantage due to a larger inventory of affordable homes.
The home-hunting frenzy of past summer selling seasons has mostly evaporated, although multiple offers on affordable homes is still common, experts say.
“This is definitely not 2016 or 2017, where if you build it or sell it, they will come,” said Paige Shipp, Dallas regional director of Metrostudy, a housing analyst firm. “You’re not going to put a house on the market and sell it in 24 hours above the asking price with multiple offers.”
The DFW market trends mimic those statewide, with prices rising and sales increasingly only modestly.
During the second quarter this year, 101,896 homes were sold, according to the Texas Realtors association. The median price rose 2.9 percent to $245,000.
Active listings increased 7.5 percent during the second quarter compared to the previous year and days on the market increase slightly to 55, according to the Realtors report.
Homes priced between $200,000 and $300,000 accounted for the largest share of sales at 32.7 percent during the second quarter. Houses priced from $100,000 to $200,000 accounted for 26.7 percent.
“While the Texas housing market remained strong in the second quarter, our markets began slowing down in terms of transaction volume coupled with tight housing inventory,” Jim Gaines, chief economist with the Real Estate Center at Texas A&M University, said in a statement.
Looking ahead to the third quarter, Gaines said sales growth will continue to be strong due to “projected lower interest rates.”
In the DFW area, sales in the largest counties of Dallas, Tarrant, Collin, Denton and Rockwall were all down during June this year compared to June 2018. Dallas and Rockwall counties had sales declines of more than 10 percent, according to data from Texas Realtors and the Texas A&M center.
Collin County recorded the smallest decline of 0.5 percent. Tarrant County sales declined 5.2 percent and Denton’s dropped 6.7 percent in June compared to June 2018.
However, Tarrant County led the DFW metro counties in June with 2,667 sales despite a 4.2 percent spike in median price to $250,000. At that price point, Tarrant County had the lowest median sales price compared to the other four counties.
Dallas County recorded the second most June sales at 2,251, with a median home price to $269,220, up 5,6 percent compared to June 2018.
Collin County topped the five counties with a median home sales price at $353,500 in June, an increase of 1.9 percent from the previous year. Only 1,739 sales were recorded there in June.
Within just the Fort Worth area, 1,200 homes were sold in June, a decline of 8.2 percent compared to June 2018, according to a report from the North Texas Real Estate Information System (NTREIS). The median home price increased to $230,00 in June, up 0.9 percent from June of last years.
There were 2,786 active listings on market in Fort Worth in June, up 5.3 percent from June218. Homes stayed on the market average of 33 days, four days longer than the previous year.
Brown said homes in the “sweet spot” of $200,000 to $300,000 continue to sell the fastest in Fort Worth and sales would be higher if there was more supply at that price point.
Homes at the higher end of the market languish on the market longer and typically sell below the original asking price. Homes priced at $500,000 to $1 million stay on market an average of 74 days, according to NTREIS data. Homes selling for $1 million to $1.5 million stay on market for average of 103 days.
In some of Fort Worth’s most popular neighborhoods such as Central-Southwest Fort Worth, including the Texas Christian University area, homes have been selling at about $15,000 below the original asking price, according to NTREIS data. Homes in the west side of the city have also been selling for a similar amount below the original asking price.
As for homebuilding, the DFW area continues to lead the major metro areas of the United States although home starts are expected to be down 5.4 percent this year, according to a new report from Metrostudy. Based on an annualized rate at mid-year, builders are expected to start 33,104 new homes this year, down from 35,008 in 2018.
The DFW area will again beat out Houston, where 29,222 homes are expected this year, down only 1 percent from 28,942 new home starts last year. Central Florida, Phoenix, Atlanta, Denver, Colorado and Austin lag Texas’ two largest cities.
Shipp said the DFW’s larger inventory of available land and willingness of builders to produce affordable homes, particularly on the Fort Worth side, accounts for the region’s ability to hold the top stop for homebuilding.
“We’re seeing builders pull back from the $400,000-plus homes and concentrating on $250,000 to $300,000 price range because that is what buyers want,” Shipp said.
More affordable homes mean smaller lots and smaller houses, but buyers are willing to make the tradeoff to be able to buy a home.
“The homebuilding market has been focused on executives and professionals and has overlooked service people like teachers and firefighters,” Shipp said. “But there are a lot of service people and first-time homebuyers who want to buy a house and the industry is listening.”
Hillwood has taken the lead in developing affordable communities such as Harvest in northern Tarrant southern Denton counties. But other developers and builders are following along in areas such as Parker and Johnson County, Shipp said.