Rapid home price growth in cities nationwide continued to break records at the start of the year, but economists expect the market could change its tune in the months ahead.
Home prices in Dallas-Fort Worth rose a record 30.7% year over year in March while national prices grew 20.6%, according to the latest report from the S&P CoreLogic Case-Shiller Index.
“Demand for homes has stubbornly kept ahead of supply this spring, even in the face of rapidly rising costs,” said Dan Handy, an economic data analyst for Zillow. “This imbalance between supply and demand for homes this spring has been the key driver in home price growth that continues to set records month after month.”
Of the metro areas included on the index, only Miami, Phoenix and Tampa, Fla., saw sharper price hikes. For the first time in nearly three years, Phoenix did not see the most rapid price growth, with Tampa leading at 34.8%.
The index compares sales price changes of specific properties over time. Case-Shiller’s price estimate is considered more accurate than home sales data from real estate agents, which can be influenced by the type of properties that are selling each month.
The Texas Real Estate Research Center at Texas A&M University, which uses data from agents’ multiple listings service, reported that the median home in Dallas-Fort Worth sold for $425,576 in April, up 25% from a year prior.
Selma Hepp, CoreLogic’s deputy chief economist, said the first quarter saw “some of the most competitive housing market conditions since the onset of the pandemic” as buyers rushed in ahead of the surge in mortgage rates that dramatically affected monthly payments.
Economists predict the rapid price growth could finally begin to slow in the coming months as buyer demand is softened by affordability challenges.
“Mortgage costs are more than 50% higher than they were a year ago, and prospective buyers will likely start to rethink what they can afford,” Handy said. “Sellers may already be responding, with the rate of price cuts now on the rise, to meet buyers where they are. Price growth will likely begin to come back towards earth as many buyers are priced out and inventory rises.”
Dallas-Fort Worth home showings were down 9% year over year in April and 11% since March, according to ShowingTime.
“Mortgages are becoming more expensive as the Federal Reserve has begun to ratchet up interest rates, suggesting that the macroeconomic environment may not support extraordinary home price growth for much longer,” Craig Lazzara, managing director of S&P Dow Jones Indices, said in a statement. “Although one can safely predict that price gains will begin to decelerate, the timing of the deceleration is a more difficult call.”
