Denton County home sales edged up slightly during May with closed sales rising roughly 3 percent compared to a year ago. Sales of new construction were a bit softer than resales during May due to inventory mixes. The city of Denton saw home sales rise by almost 11 percent in May as lower average price points continued to boost activity. With the Federal Reserve poised to hike rates again this week, it’s all about interest rates and affordability.

The greater DFW area saw relatively flat home sales volume in May. Although new home builders were able to close about 5 percent more homes in May, the lack of affordable resale inventory continued to weigh on overall sales volume. Sales of homes priced at $250,000 or less far outweighed sales volume in the more expensive price segments, and with fewer of those homes available, overall sales volume has stagnated.

Pending sales volume in the DFW area continues to point toward softer activity ahead which is not surprising. The Fed’s latest rate hike cycle couldn’t come at a worse time if you are looking to buy a DFW home. With home prices at record highs, higher rates bring higher monthly payments, property taxes and insurance costs. This is no doubt why both closed and pending sales volumes are flatting out even in Denton County Texas.

Contrary to the rubbish many real estate industry apologists are spouting, there is no shortage of inventory, not even here in the Dallas -Fort Worth area. What’s happening with the local real estate market is what’s playing out in many markets across the country with a mismatch between what’s offered for sale and what people can actually afford. The DFW area is still experiencing very healthy job growth, but that doesn’t mean all of those people moving here can afford a $500,000 home. Most of them can’t!

With another FOMC meeting this week, it will be interesting to watch mortgage interest rates as the Fed attempts to offer more misdirection regarding the strength of the real economy vs the fairy tale economy that the Fed’s economists seem to be taking their cue from.