The North Texas home market took a turn for the better in March. Sales of pre-owned homes rose 11 percent from March 2009. And condo sales soared by more than 30 percent.
Even more encouraging for the market, median home sales prices increased by 6 percent from a year ago.
The upbeat home market data may signal that the worst of the local housing market downturn is in the rearview mirror. But analysts and economists stress that the spike in sales is partly due to a federal tax credit for homebuyers, which expires at the end of April. That temporary incentive could have artificially inflated sales.
“Certainly, the expanded tax credit … has been an incentive to buy now,” said Dr. Bernard Weinstein, a Southern Methodist University economist. “We may see lower sales in the second quarter as buyers have shifted typical spring buying.”
Analysts also point out that the March results are being compared with a period a year ago when housing was at its lowest point. So, the gains are from a low base.
Real estate agents sold 6,036 pre-owned single-family homes in March, according to the latest statistics from the Real Estate Center at Texas A&M University and North Texas Real Estate Information Systems. It was the strongest single month for sales since last October.
The median price of pre-owned homes sold last month was $144,900. That’s the best price since last summer.
And in one peek at the future, the report indicates that the surge is likely to continue, at least for the short term. Pending pre-owned home sales in the North Texas market – which includes 24 counties – were up 22 percent at the end of March.
Some buyers included in the March data may have signed home purchase contracts in late January and February because of worries that mortgage rates would rise soon.
Indeed, mortgage rates this week averaged about 5.2 percent nationwide, the highest level in eight months.
“Many people expect to see interest rates increase now that the federal government has ended its program of purchasing mortgage-backed securities,” said David Brown, who heads the Dallas office of housing analyst Metrostudy Inc. “Buyers and agents realize this may be as low as we see interest rates for a while.
“Some of the buyers who will close home purchases this month and next likely accelerated their purchase decision to qualify for the tax credit. The outlook for sales in the second half of the year is less certain.”
The median price of pre-owned homes sold last month was $144,900, the best price since last summer.
Some of the biggest year-over-year sales jumps in March were in affluent neighborhoods in the Park Cities, North Dallas and Westlake. Buyers in these areas usually don’t qualify for homebuying tax credits.
“A year ago, those high-end buyers were running for the hills,” Brown said. “Some of the buyers are now viewing this long term as a great investment and jumped out there to buy.”
Conversely, some more affordably priced areas such as Lancaster and Duncanville saw sharp annual declines in sales last month.
With March’s strong home sales numbers, year-to-date prices are up 3 percent from the first quarter of 2009 and total sales are up a scant 1 percent.
No flood of sellers
So far, the improvement in home activity hasn’t prompted more sellers to enter the market. Last month, 36,730 pre-owned single-family homes were up for sale in local real estate agents’ multiple listing services, 6 percent fewer than in March 2009.
There is a 6.4-month supply of homes on the market in North Texas – close to what is considered a balanced market.
But that supply figure doesn’t include some previously foreclosed homes that aren’t being marketed through the multiple listing service.
About 23 percent of Dallas-Fort Worth residential sales are from foreclosed properties sold by lenders or from distress sales, another report out Thursday says.
While that may seem high, it’s among the lowest among the 25 largest U.S. housing markets studied by First American CoreLogic in January. Among the highest were Riverside, Calif., where 62 percent of home sales were from foreclosures or distressed sales, followed by Las Vegas at 59 percent, and Sacramento, Calif., at 58 percent.
While Thursday’s report had positive signs, Dallas-Fort Worth continues to see record home foreclosures. And more than 6 percent of mortgage holders in the area are seriously late in making payments.
At the same time, residents who feel better about economic conditions and are secure in their jobs are still in the market to buy and take advantage of lower home prices and finance rates, real estate agents say.
The increase in pre-owned home sales in March was in contrast to D-FW new home sales, which were down 20 percent from the first quarter of 2009.
But the new home market makes up a small share of overall sales.
Fewer than 3,600 vacant new houses were on the market this year – about a tenth of the number of pre-owned homes up for sale.
“Certainly another objective of the tax credit has been to help mop up foreclosures, and the absorption of this shadow inventory goes a long way to adding stability to the market,” said Ted Wilson with Dallas’ Residential Strategies Inc.
Recent forecasts that North Texas’ economy will add between 10,000 and 15,000 jobs this year also give analysts hope that the housing turnaround here will last.
“Ultimately, the job market will need to improve for the home sales to experience sustained growth,” Brown said.
D-FW AREA HOME RESALES UPDATE