North Texas home sales improved by roughly 7 percent in September, boosted by an extremely favorable year-over-year mortgage rate comparison which kept affordability levels manageable for area home shoppers. Denton County saw a 7 percent improvement in September home closings, while the City of Denton saw home sales fall slightly compared to the same month in 2018. Pending home sales in the Dallas-Fort Worth area improved by 9 percent in September, but not by the magical 12 percent as reported in the area’s largest paper. Pending sales activity in Denton County was up double digits, rising 17 percent from the same time a year ago.

Average home prices were up 3.7 percent in the Dallas-Fort Worth area. Prices rose 2.4 percent in Denton County, and 1.9 percent in the City of Denton. Dallas County saw a 5.3 percent jump in prices, while Tarrant County experienced a 4.1 percent jump in average prices last month. Prices for both resale homes and new construction rose in September.

The Dallas Morning News’ real estate “editor” jumped the ship this week and trotted out a fictitious press release estimate of North Texas home sales which was botched the Real Estate Center at Texas A&M. The DFW area did not see a 9 percent jump in “preowned single-family home sales” nor did we get that much improvement in total single-family home sales. NTREIS updated stats as of October 10 2019 show 8594 single-family closings for September. That’s TOTAL, as in both resale and new construction sales, far less than the 8998 estimate regurgitated by Steve Brown.

It looks like September closed sales estimates were juiced (over-estimated) by 2-3 percent, similar to what we saw for the August estimates. Sadly, this erroneous data seems to be of no concern for Dallas’ largest newspaper, because nobody else that I am aware of has called out Mr. Brown out for his failure to actually question the press releases and bogus estimates which he keeps regurgitating as fact.

In a bit of self parody, the Dallas Morning Snooze real estate editor did manage to get in a quote from the equally comical Jim Gaines, chief economist of the Real Estate Center at Texas A&M University. Apparently Dr. James Gaines thinks record high home prices in North Texas look “really good”.

“Housing prices have gone up here in Texas, but relatively we look really good….D-FW is the fourth largest metro area in the country, and it’s the most affordable of the top 10.”

I don’t know about you, but I feel better already seeing this positive news from the guy heading the same outfit which apparently can’t produce accurate sales estimates for the North Texas home market. Now that I think of it, Dr. Gaines would probably make a great central banker. Central banks seem to have a real affinity for economists with a loose attachment to actual facts.

Considering that mortgage interest rates were 102 basis points lower in September compared to the previous year, it’s not a surprise to see home sales rebound. What is concerning is that we have increasingly little left for an encore. With mortgage rates already back near record lows, it is going to be difficult to sustain home sales growth with elevated prices and stagnant income growth.

This is the catch-22 created by Fed policy. The law of diminishing returns points to an eventual reckoning for the housing market. Are we going to see another 20 percent effective reduction in mortgage rates? What will the surrounding economic landscape look like if we do?

Mortgage Interest Rates October 10 2019

The Federal Reserve has already cut the Fed Funds rate twice this year, and restarted QE (quantitative easing) in an effort to keep asset prices (aka stocks and real estate) levitated. Contrary to the horse manure now coming out of Jerome Powell’s mouth, adding $176 billion to the Fed’s balance sheet in a single month is absolutely quantitative easing. The repo market was ringing some serious alarm bells in September, and as is usually the case, the Federal Reserve was caught by surprise.

Operation Repo October 10 2019

Average home prices in the Dallas-Fort Worth Area have continued to move higher…

DFW Average Home Prices September 2019

Despite the Fed’s capitulation on policy and levitation of asset prices, actual home sales in the Dallas-Fort Worth area remain sluggish. The rolling 12-month average of closed sales for the entire DFW market is currently down 1 percent.

Dallas-Fort Worth Home Sales September 2019