Is a cooldown coming for D-FW’s scorching hot home market?

North Texas’ housing market is experiencing a record year for both sales and prices. But don’t be surprised if the pace of housing gains slow in 2022.

While home costs in the Dallas-Fort Worth area are up by about 17% in 2021, price increases will likely average just under 5% in the year ahead, predicts Dr. James Gaines, the longtime economist for the Texas Real Estate Research Center at Texas A&M University.

“Many of you are hearing the housing market is losing some steam,” Gaines told members of the MetroTex Association of Realtors in a virtual meeting. “It does appear there is something of a slowdown in the rate of sales going on.

“Affordability has become an issue obviously,” Gaines said. “We are beginning to see the early signs of some sticker price stock. Incomes have not increased as rapidly as home prices, and that is throwing everything out of balance.”

North Texas home prices have soared by more than 45% in the last five years. In July, single-family home prices in the Dallas area were up 23.7% year over year, according to the latest estimate in the S&P CoreLogic Case-Shiller Home Price Index.

While prices are still rising, area home sales have been down slightly year-over-year during the last three months.

“The real reason for the slowdown in sales is the lack of inventory and the price affordability issue,” Gaines said. “Active listings continue to fall.

“There is very low inventory in that $200,000 to $300,000 price range,” he said. “Percentage-wise, almost 67% of sales are over $300,000.”

There’s been a jump in the number of houses in the D-FW area listed for a half million dollars or more.

This year, almost 23% of D-FW homes sold have been properties going for $500,000 and more. In 2019, less than 13% of area sales were above a half million.

Statewide, there’s also been a change in the prices of properties sold, Gaines said. “Almost a third of the homes sales in Texas in the second quarter of 2019 were under $200,000,” he said. “Now it’s less than 20%.”

Gaines said the pandemic has altered homebuying patterns in the state.

“Statistically there is probably a greater movement to the suburbs — more people looking for lower prices and more space,” he said. “But there are significant numbers moving in both directions.

“We are seeing an increase in housing demand in the urban centers and simultaneously an increase in the suburbs.”

Event with a slowdown in housing activity in the final moths of 2021, the Texas Real Estate Research Center is forecasting a record year for existing home sales in D-FW.

“We are expecting total sales for the year to increase at a 3% rate,” Gaines said. “It will still be higher than 2020.

“Home sales in Texas are expected set a record.”

Next year’s…