Booming Home Sale Stats for DFW in 2016 – So Far

Wednesday, July 6th, 2016 and is filed under Housing Market

As we’ve mentioned in previous blogs, 2015 was an active one for home sales in North Texas. And according to recent reports, 2016 is shaping up to be just as busy, if not record-breaking, for home sales.

Specifically:

• New home sales in the Dallas-Fort Worth area hit its strongest quarter in close to a decade. According to analyst Residential Strategies, local builders sold 7,289 new houses in Q2 2016, an increase from the 6,029 homes sold in the second Q2 2015[1].
• Meanwhile, North Texas home prices hit a high in June at more than $293,000. Additionally, real estate agents sold the highest number of houses – ever – in a single month. More than 10,800 houses were sold in June 2016, a 7% hike from June 2015[2].

[1] Steve Brown, July 11, 2016, “D-FW New Home Sales Up More Than 20 Percent.” Dallas Morning News. Retrieved from http://www.dallasnews.com/business/headlines/20160711-d-fw-new-home-sales-up-more-than-20-percent.ece.

[2] Steve Brown, July 8, 2016, “North Texas Hot Summer Housing Market Sets Record for Sales and Prices.” Dallas Morning News. Retrieved http://www.dallasnews.com/business/headlines/20160708-north-texas-hot-summer-housing-market-sets-record-for-sales-and-prices.ece.

• Data from the Real Estate Center at Texas A&M University and North Texas Real Estate Information Systems reported that pre-owned home sales are 9% higher than last year’s record-breaking purchases during the first half of the year[1].
• Additional metrics point out that, as home sales and home prices continue to climb, months of inventory continue to drop.

While these home sales are good news for the industry, they also speak to ever-increasing demand for housing.

The Perfect Storm?

Exploding home sales don’t happen in a vacuum. Factors such as seasonality and mortgage rates are lending a hand. June and July, in general, tend to be active months for home sales activity. And mortgage rates have been ranging from 3.4%-3.7% depending on the lender; that’s for 30-year, fixed rates. The 7/1 Adjustable Rate Mortgages have been dipping as low as 2.9%[1].

But the current boom goes beyond summer months and lower mortgage rates. One major factor is . . .

Jobs. According to May 2016 data from the Bureau of Labor Statistics (the most recent metrics available), job growth in the Dallas-Fort Worth-Arlington Metropolitan Statistical Area (MSA) stood at 3.7%[2]. This is actually down from the 3.9% that the job-growth rate reported for a couple of months. Additionally, unemployment was at 3.5%; during the past six months, in fact, the unemployment rate has been well below the 4% mark. The drivers of this growth have been Trade, Transportation and Utilities; Financial Activities; and Leisure and Hospitality.

More jobs attract more people, leading to the next factor of . . .

[1] Mortgage Rates for July 15. Bankrate.com. Retrieved from http://www.bankrate.com/mortgage.aspx?type=newmortgage&market=18&propertyvalue=312500&loan=250000&perc=20&prods=9&fico=740&points=Zero&cs=1.

[2] Economy at a Glance; Dallas-Fort Worth-Arlington, TX (May 2016). Bureau of Labor Statistics. Retrieved from http://www.bls.gov/eag/eag.tx_dallas_msa.htm.

The increase in demand, among other things, continues leading to . . .

Housing Scarcity. This is an issue we’ve discussed before. Though home builders are doing their best to meet the demand, issues such as labor shortages, impact fees and land shortage continue hampering efforts. This is why, whenever anyone puts a reasonably well-kept-up house up for sale in areas throughout DFW, that person will likely receive a plethora of offers.  Realtors have been reporting closings taking place within a month – and even less.

But Can it Last?

What’s interesting to observe is that all of this activity is taking place before major corporate relocations occur, which include Toyota USA and State Farm Inc., among others. And those are the well-publicized relocations; there are likely more waiting in the wings.

So yes. The perfect storm of home sales and prices will continue for a while, according to Ted Wilson, an analyst with Residential Strategies. “I expect the builders to do well during the next two or three years, because of all the relocations coming to our area,” he commented in a recent article.