After months of an overheated residential real estate market, the latest data from June show evidence of a slowdown spurred by higher mortgage rates and escalating housing prices.
“We are at that time of the year when typically we see home prices at their peak, but recently we’ve seen more price reductions,” said Shannon Ashkinos, 2022 president of the Greater Fort Worth Association of Realtors and a vice president at JPAR Real Estate.
Indications show the market is making an adjustment to a more normalized situation, Ashkinos said.
“The question is: What does that look like now?” she said.
Inventory in June in Fort Worth jumped to 1.6 months, a 15 day increase from last month, and a 15-day increase from June of 2021, according to data from the Texas Real Estate Research Center at Texas A&M University. That’s still well below the 6 1/2 months of inventory that the research center cites as a market balanced between supply and demand.
Although still up 21 percent year over year, the median price for a home sold in Fort Worth in June was $363,000, down from May’s median price of $367,000. Parker County continued a downward trend back to a $450,000 median price, while Tarrant and Johnson Counties saw small increases.
“The simple story is mortgage rates have climbed from 3% and got up close to 6% here at the end of June, and it’s curbing affordability,” said Ted Wilson, principal with Residential Strategies Inc., a Dallas-based residential real estate research and consulting firm.
Home builders also are slowing down construction.
In North Texas, builders started construction of 14,871 new homes in the second quarter, down 7% from the first quarter’s record of 16,012 and down 3.6% from a year earlier, according to Residential Strategies.
“In the last three months, the traffic and sales have moderated and builders are changing their approach to the market,” said Wilson.
Wilson expects construction starts to slow in the third quarter, as builders have realized the fast pace of construction in the past few months is unsustainable.
“There are still labor and supply chain issues for builders,” said Wilson.
April was the last solid month of sales activity for most homebuilders, Wilson said.
“May traffic fell about 55% from April, and June fell even more,” he said.
While there are fewer prospective buyers in the market, Wilson said, the job growth in Dallas-Fort Worth is still allowing sellers to make a decent profit. But there are some builders offering some incentives by locking in lower mortgage rates to help potential buyers with financing and/or covering closing costs.
“That ‘take it or leave it’ and wild bargaining for a home era may be over, but builders still want to move those homes,” said Wilson.
The wild swings in the local housing market have caused several homebuilders and developers to go into the build-to-rent homes, Wilson said.
“A lot of investors have gotten into this, and there’s a lot of product on the market and a lot more coming,” he said.
Hillwood Communities and BB Living, on July 12 announced they are partnering on a single-family-rental neighborhood within Harvest, a residential community located in Northlake and Argyle at Interstate 35W and FM 407, north of Fort Worth.
BB Living will build 191 build-for-lease homes in Harvest that range from 3 to 4 bedrooms and 1,800 to 2,500 square feet. BB Living has partnered with homebuilder Toll Brothers on 30 build-to-rent communities nationwide, with over 5,000 homes.
“Single-family for lease homes are in high demand,” said Fred Balda, president of Hillwood Communities, in a news release.
Bob Francis is business editor for the Fort Worth Report. Contact him at bob.francis@fortworthreport.org. At the Fort Worth Report, news decisions are made independently of our board members and financial supporters. Read more about our editorial independence policy here.
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