But that doesn’t mean that home sales and prices will stall in North Texas or nationwide.
Most housing analysts anticipate a robust spring and summer home selling season — just not as frenetic as in 2013.
“What will be different this spring is there should be more inventory on the market,” said Jed Kolko, economist with Trulia Inc. “More inventory because prices have come up, so more people will be thinking about selling.
“Also, there is more construction than there was a year ago, so that adds more inventory,” Kolko said.
The rise in the number of homes available to buy and higher financing costs should temper the market, he said.
“We can all use some calm,” Kolko said. “It should be a more level housing market in the next year.
“Prices aren’t rising as fast as they were, and people aren’t as worried about another bubble.”
Last year brought unprecedented growth in the Dallas-Fort Worth housing market, erasing damage done during the recession.
Median home sales prices in North Texas were up by more than 10 percent, roughly double the long-term average rate of increase for the area.
The number of pre-owned homes sold jumped almost 20 percent.
With the surge in sales, inventory fell to a near-record low.
At the end of the year, there was less than a three-month supply in the Dallas area. That’s about half what is considered a normal market.
“I’d be surprised to see double-digit home price increases this year,” said Dr. James Gaines, an economist with the Real Estate Center at Texas A&M University. “I’m expecting more sellers to come forth and even up — at least to some extent — the disparity between supply and demand.
“Demand will still be strong, so prices will go up despite interest rates that slowly drift upward during the year,” Gaines said.
He said any real slowdown in housing demand probably won’t happen until the second half of 2014.
Ted Jones, an economist with Houston-based Stewart Title, said robust job growth in Texas ensures a strong housing market. But maybe not as dynamic as in 2013.
“Expect to see a 6 to 8 percent increase in total existing home sales in 2014, with median prices rising from 5 to 7 percent” statewide, Jones said. “Homeowners in Texas should be pleased with the value performance of what, for most individuals, is their largest store of wealth: their home.”
Dallas-Fort Worth is one of the few major markets in the country where home prices have surpassed where they were at the top of the market in 2007.
But home construction in North Texas is still nowhere close to where it was before the recession.
D-FW single-family home starts will rise again in 2014, but probably not as fast as in the previous year, said David Brown, who heads the Dallas office of Metrostudy Inc.
“Starts jumped over 20 percent in 2013, and I expect them to grow another 10 percent to 15 percent this year,” Brown said. “Higher new home prices and higher interest rates impacting affordability are one reason the growth rate will likely slow in the next year.”
And continuing constraints on builders — including lot supplies and labor shortages — will mean that new home inventories will remain tight in 2014, he said.
“I expect the market to be very strong this spring because total housing inventory is likely to be even lower than it was last spring,” Brown said. “When buyers start to look for homes, there will be even fewer choices than last year.
“This is likely to create the same competitive environment amongst buyers that existed in the market in the first half of 2013.”
Nationwide, single-family home starts are forecast to rise by 30 percent this year, pushing total home construction to the highest point since 2007, said David Crowe, chief economist with the National Association of Home Builders.
“The level of mortgage interest rates is not as significant as the availability of mortgages,” he said. “I foresee some slight easing in the eligibility rules.”
Article By: Steve Brown, Dallas Morning News
See full article here.