Already astronomical North Texas home prices were sent into orbit in May.
Median single-family home prices in the area soared by an unprecedented 26% from May 2020 levels. The cost of a mid-priced home sold by local real estate agents was at a record high $341,000.
North Texas home prices rose by 5% — what in past cycles would be considered a generous annual increase — just between April and May, according to the latest data from the Texas Real Estate Research Center and North Texas Real Estate Information Systems.
With May’s blockbuster price gain, median home prices in the area are up 17% for the first five months of 2021 compared with the same period last year.
Along with the spike in housing costs, the number of North Texas homes sold in May increased 27% from a year earlier. But that’s a comparison with the start of the COVID-19 pandemic, when local sales plunged.
“It’s meaningless because you are going to get really huge year-over-year increases from when everything shut down,” said longtime Texas housing economist James Gaines. “I think we are a year away before we can say we are back to anything looking like normal.
“There isn’t an economist in the world that can really tell you what is going on.”
What Gaines and other analysts can say for sure is that a severe shortage of homes on the market is driving the housing price inflation.
At the end of May, only about 7,000 single-family homes in North Texas were listed with real estate agents — the lowest inventory in decades. There’s less than a one-month supply of houses on the market.
In May alone, area sales agents sold more than 10,000 houses. Another 11,709 sales are pending — properties under contract but not yet sold.
Many homes are going under contract for sale as soon as they hit the market. On average, it took only 24 days to sell a house in North Texas in May.
The recent surge in homebuying has steadily ramped up over the last few months. Sales of houses by real estate agents in the first five months of 2021 are 11% higher year-over-year.
“Mortgage rates have gone up a tick but not enough to affect demand significantly,” Gaines said. “We are probably going to see another record year of sales.
“We do anticipate the market is at some point going to level out a little bit.”
But the median cost of a preowned house in the area is almost 50% ahead of where it was five years ago, which is an unheard of rate of appreciation.
“It’s an auction mentality out there — buyers are scrambling for houses,” said Dallas housing analyst Ted Wilson of Residential Strategies. “It’s over the top crazy right now, and people are just throwing money at houses.”
Wilson said with homebuilders running at full capacity, there’s no way construction will help meet demand for North Texas homes.
“In the near term there’s no salvation in the supply chain,” he said. “Some people say if mortgage rates went up it would be good because it would slow the market.”