The housing market in the Dallas-Fort Worth (DFW) area of Texas has seen a significant decline in the last quarter of 2022. According to a report by Dallas-based housing analyst Residential Strategies, builders began construction of almost 8,000 new homes, which is a 38% decrease from the previous year. This marks the largest decline in quarterly North Texas home starts since the Great Recession.

This decline can be attributed to a number of factors, with the most notable being the higher mortgage rates and affordability challenges for buyers. The end of 2022 saw mortgage rates reach their highest levels in nearly eight years, making it difficult for many potential buyers to secure a loan. Additionally, the ongoing pandemic has led to job losses and economic uncertainty, making it more difficult for people to afford a new home.

However, despite this decline in new home starts, builders in the DFW area are not sitting idly by. Instead, they are shifting their focus to completing and closing existing housing inventory. This is an important shift, as it allows builders to sell the homes they have already begun construction on, instead of continuing to add to the housing supply.

The lower level of home starts will also have a positive impact on the construction industry. With fewer new homes being built, there will be more capacity for construction companies and subcontractors to complete existing projects. This is expected to shorten the amount of time it takes to build a new home, which will in turn lower costs for buyers.

One of the biggest challenges that builders have faced in recent years is the uncertainty of construction costs. Many DFW builders have taken a “spec-and-release” approach, starting homes in anticipation of demand and releasing them for sale late in the construction process when costs and margins were more clear. However, with the recent decline in new home starts, builders who took this approach are now having to provide incentives like mortgage-rate buydowns and discounts to get the homes to sell.

Despite these challenges, there is still hope for buyers in the DFW area. According to Ted Wilson, principal with Residential Strategies, “buyers that were waiting for more affordable opportunities compared to earlier in 2022 will find that many communities offer compelling house prices today.” Additionally, the savings that can be achieved in direct construction costs are likely to be passed onto the consumer in 2023, making it more affordable for people to purchase a new home.

The decline in new home starts also has an impact on the existing home market. Existing Dallas-Fort Worth single-family home sales saw their biggest decline in more than a decade, with a 30% fall from November 2021 to 2022 amid the higher mortgage rates. As of November, about 83,000 single-family homes had sold in Dallas-Fort Worth, according to a Texas Real Estate Research Center at Texas A&M University report based on data from REALTOR® associations. That represents an 11% decline from the same period in 2021.

While the housing market in the DFW area may be experiencing some challenges, it is important to remember that this is not a unique situation. The housing market is cyclical, and it is not uncommon for it to go through periods of decline. The important thing is that builders and real estate agents are making the necessary adjustments to weather the current market conditions.

As a Real Estate Agent in Frisco, Texas, I have been keeping a close eye on the housing market trends in the Dallas-Fort Worth area. It is true that the market is currently facing some challenges, with a decline in new home starts and higher mortgage rates making it difficult for many buyers. However, it’s important to remember that the housing market is cyclical, and it’s not uncommon for it to go through periods of decline.

I advise my clients to be patient and persistent in their home buying or selling journey. The market conditions may be challenging but it’s not impossible to find a good deal. In fact, with a lower level of homebuilding, it is likely that construction costs will decrease, leading to lower costs for buyers and helping to relieve supply-chain issues. It’s important for buyers to be well-informed about the current market conditions and to have a good understanding of their own financial situation before making a decision to buy.

It’s also worth noting that the decline in new home starts has led to builders focusing on completing and closing existing housing inventory, which may present opportunities for buyers to purchase existing homes at a more affordable price. Sales of new homes also rose last quarter as builders worked to complete the record amount of new construction they started earlier in the year and in 2021.

Overall, while the housing market may be facing some challenges, it’s important to keep a long-term perspective and to remain patient and persistent in your home-buying or selling journey. As a Real Estate Agent, I am here to assist and guide my clients in navigating the current market conditions and finding the best possible deal for them.

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