The real estate market is constantly shifting, changing, and evolving. As I think about the end users and consumers, I think it’s important for us Realtors® and Real Estate Advisers to not just throw a bunch of numbers at people and tell people “It’s the best time to buy a house”, but to break down how the market is shifting and help people make informed real estate decisions based on their individual situations. That is why I always like to have an easy to understand “theme” for my monthly market updates. The theme for August is “How Interest Rates Affect Affordability and Activity”.
The current mortgage interest rate for a standard 30-year FRM (or fixed-rate mortgage) is 6.49%, according to Freddie Mac. The headline from their website is “Mortgage Rates Remain at the Lowest Level in Over a Year”. In 2023, mortgage rates nearly hit 8 percent, causing the housing market to slam its brakes. Now, interest rates are dropping and will likely trend down in the coming months, as inflation continues to decrease. It is historically true that when interest rates decrease, more home buyers hit the market (or return to the market and continuing their home search).
Not only are interest rates dropping, the median home sales prices in North Texas are also dropping slightly these last few months. As of July, the median sales price for a property in the Dallas/Fort Worth metroplex was $380,000. That is down 1.3% from the same time in 2023. If this trend continues, more buyers will be in the market looking for homes, and the affordability will increase in a positive direction. Another key metric to keep an eye on is the “Percentage of Original List Price” number. According to our NTREIS system (the North Texas Real Estate Information System), the average percentage of what a property closed for versus what it was ordinally listed for is 95.6%. For buyers, that is a good thing! However, in real estate, everything is cyclical. My personal feeling is now that more buyers are returning to the market and interest rates are falling, we will see more competition. With overall closed sales on the rise, it’s definitely a good time for home buyers.
If you (or someone you know) has any questions about the real estate market, needs a deeper dive into a specific county or community in the DFW Metroplex or just wants to know where we are all headed, give me a shout!