During the second quarter of 2024, our housing markets continued a promising trend that emerged at the start of the year. In the first quarter, we observed increases in closed single-family home sales across many of our markets, a notable turnaround following several consecutive quarters of consistent declines. As of the second quarter, most markets have climbed ahead of last year’s first six months in closed volume.
Closed sales for single-family homes and condominiums in Dallas County for Q2 2024 are up 16 percent compared to Q2 2023. Inventory — the number of homes on the market at any given time — is up a whopping 67 percent when comparing those same quarters. In Fort Worth, the increase for closed sales is 13 percent and inventory is up 49 percent. Southlake and Northeast Tarrant County saw closed sales up 16 percent and inventory up 49 percent. Collin County saw closed sales increase by 20 percent and inventory increase by 77 percent. Parker County was up 8 percent in closed sales and 6 percent in inventory. Rockwall County is up 18 percent in closed sales and 47 percent in inventory, while Denton County is up in closed sales and inventory by 11 percent and 44 percent, respectively.
Inventory levels have been increasing for a few months, following years of declines, so that at the end of the first half of 2024, all counties we serve now have more listings for sale than in 2023. The increase in inventory suggests that our formerly low-inventory markets have begun to normalize. The number of new listings taken year to date, as opposed to total standing inventory, is hovering close to flat or inching very slightly up or down year over year in most areas. Dollar volume in new listings taken has increased significantly in most areas.
Supply and demand edge toward equilibrium
These data points tell us that the market is effectively sustaining itself, for as new listings launch, a ready-and-waiting pool of buyers is generally absorbing them. The level of buyer demand remains outsized compared to the available inventory. When the balance of supply and demand is tipped in favor of sellers, properties are less likely to sit for long on the market and more likely to receive offers from multiple buyers. The natural outcome of the uneven supply-and-demand dynamic is a rise in median sale prices, as seen across all our markets: Six-month median single-family home sale prices at the end of the first half of 2024 increased from the same time last year in the counties of Dallas, by 4.8 percent, Tarrant, by .5 percent, Parker, by 3.2 percent, and Denton, by 2.1 percent. The exceptions were Rockwall County and Collin County, which decreased by 1.9 percent and 3.9 percent, respectively.
Click here for more information and to view neighborhood data in each county we serve. The data is provided by the North Texas Real Estate Information System (NTREIS) and does not include off-market information.
In addition to improvements in inventory, the upward trend in closed sales volume throughout our markets indicates an ongoing change in the product mix being sold, with more transactions falling in the higher price ranges. In market after market, the lowest price brackets are the segments where unit sales are decreasing. Mid- or top-tier price ranges in virtually every territory found increases in unit closings compared to the first six months of last year.
How the mortgage rate can matter
One reason for this phenomenon? The lowest end of the market is the sector most impacted by mortgages. In contrast, higher price ranges often see a greater prevalence of cash transactions. Mortgage rates have become a negative factor in the housing market, substantially increasing from historic lows in the past three years. At the end of the second quarter of 2024, the average 30-year fixed mortgage rate was 6.86 percent, which is down from the significant peaks of recent times — rates exceeded 7.3 percent in May and neared 8 percent last fall — but still excessive relative to the mortgage rates of less than 4 percent that most homeowners now hold. Not only are the elevated rates affecting the purchasing power of those buyers who depend on mortgages, but they are also creating a lock-in effect for many homeowners. Effectively, owners who would otherwise trade up are staying put, hesitant to exchange their current low rate for a much higher one if they purchase a new home. Still, we are starting to see some loosening in the market, as indicated by the improvements in inventory.
Mortgage rates retreated in June, based on optimism that the Federal Reserve will reduce interest rates soon, according to Freddie Mac, despite leaving them unchanged at its most recent meeting and downgrading their previous prediction of three rate cuts in 2024 to just one. The Fed held rates steady in the face of stubborn inflation data. Still, with inflation gradually cooling and seemingly heading toward the 2 percent goal the Fed has targeted, there is reason to expect a cut on the horizon, according to multiple economists. This would further reduce mortgage rates, opening the housing market on a broader scale.
Beyond inflation and interest rates, the traditional economic factors we consider when gauging the real estate market’s health provide further reason to feel optimistic about housing. The GDP is estimated to increase in the second quarter of 2024 at an annual rate of 2.2 percent after growing by 1.4 percent in the first, according to the Federal Reserve Bank of Atlanta. The stock market continues to demonstrate strong performance, with the Dow hitting a historic, all-time high in the middle of May and all three major stock indexes in the U.S. experiencing gains each week in June. Unemployment is still low at 4 percent, although it has ticked up slightly recently, reaching its highest point since last August. Consumer confidence, meanwhile, fluctuated during the second quarter following three months of declines, increasing to 102.0 (1985=100) in May but then dipping to 100.4 in June, according to the Conference Board Consumer Confidence Index.
I hope you find all of this informative. And if it’s all a little too heady, any one of our expert real estate advisors can help add some perspective to it — translating it into guidance about buying, selling or holding steady. For good advice, you couldn’t be in better hands.
Russ Anderson
President and CEO
Briggs Freeman Sotheby’s International Realty
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