Denton County home sales were relatively flat in April compared to the same month in 2017. Preliminary sales figures show a 1 percent decline in closings within Denton County compared to a two percent sales gain in the larger DFW area. Average home prices in Denton County were up 7.5 percent compared to last year, in line with the record high prices seen in recent months. Pending sales, a more forward-looking indicator of future closings also point to some stagnant sales activity ahead. Pending sales in Denton County show to be up 2.7 percent while the larger DFW area is registering a one percent rise in pending sales for April according to NTREIS trends data.

The DFW housing market continues to hold its own in terms of solid sales and healthy demand for homes. That being said, most of that demand is centered on the more affordable price sectors of the market. With home prices near record highs, both buyers and renters have been getting pinched with monthly payments that are at or near extremes.

This is a much different scenario seen after the 2008 housing crash where a large numbers of homes hit the market putting downward pressure on rents and prices. During the last 10 years we have seen upward pressure on both rents and home prices as the Federal Reserve amassed a staggering $4.4 trillion balance sheet. This huge injection of cheap liquidity allowed wealthy investors and existing asset holders to mop up affordable inventory and pull it off the market, thus creating a double-bind for both home buyers and renters.

New home sales rose 19 percent in the DFW area during the month of April for one simple reason…The average price of a new DFW home closed in April fell by 6.3 percent! That translates to a decline of $23,834. New home sales in Denton County rose by 1.3 percent during the month of April because the average price of a new Denton County home sold in April was also up by 1.4 percent.

With the rampant home price inflation seen during the past few years, it is readily apparent that buyers have hit a wall in terms of what they can afford to pay. New home builders are now faced with the choice of maintaining sales growth or maintaining prices. If they Fed is raising interest rates (and thus the cost of your monthly payment), builders are not going to be able to push those expensive luxury homes they would rather be selling for fatter margins.

The Denton County lease market continued to see impressive demand in April with lease activity rising 27 percent compared to last year. If you are getting squeezed by record high home prices, renting is your next best option. Average rents in Denton County were relatively flat compared to last year despite the surge in demand. This speaks to the huge volume of DFW homes that were bought up by investors and speculators during the last few years.

Remember that if you are in the market to buy or sell a home, there are plenty of Realtors who are selling a slightly different picture of the housing market. The reality is that the DFW housing market is now beginning to see the fruits of the Fed’s asset inflation experiment, the inevitable results of which will be painful for many who are caught off guard.

Update May 14, 2018: Apparently the Dallas Morning News is also playing fast and loose with the truth on DFW home sales. They posted an interesting piece on a supposed 11 percent gain in sales for the month of April. I say interesting because it didn’t happen!

I’m staring at my screen this morning looking at a 1.9 percent increase in DFW closings for the month of April. Even if you take the DMN for their word that we closed 9700 homes here in the DFW area, an apparent statistical estimation on what the end-of-month total will be, there’s no way you get to a 11 percent increase. NTREIS trends data show that April 2017 saw 9393 home closings in the DFW area. Even if we end up with 9700 sales for April 2018 that’s only a 3.3 percent increase when factoring all construction types (both new and resale). The Dallas Morning News is suggesting that we had almost 9700 closings of resale single-family homes:

“Almost 9700 preowned single-family homes were sold by area real estate agents last month” DMN, Steve Brown

So what’s the real number of “resale” homes sold in April according to today’s NTREIS trends data? It’s 8151, a DECLINE of 0.6 percent from last year’s 8197 resale closings. Pending sales of DFW resale homes show a 1.1 percent DECLINE (9148, down from 9254 last year).