Denton County’s real estate market continues to struggle with inventory & affordability issues. While higher than last year, closed sales in North Texas were still hovering near a decade-low in January. Pending home sales in North Texas moved higher for the month, but pending sales contracts were still 10 percent lower-year over year in January.
The temporary relief in mortgage rates during the last few months of 2023 translated into additional activity for the housing market. So far in 2024 housing activity remains sluggish. Mortgage rates are bouncing around between 6.5 and 7 percent. Inflation appears to have stabilized well above the Fed’s target, while the job market has surprised to the upside. A diminished supply of affordable homes also continues to weigh on activity.
Higher Prices Are Holding Back Sales
Here in Denton County, good homes are still selling well. The median price for a Denton County home was $440,000 in January, up 3.6 percent from last year. The average home sold for $525,000, up 4.8 percent from last year. Prices have been holding steady, but inventory & affordability issues are still a concern for many prospective buyers.
Land prices in Denton County are still very expensive, and sellers are apparently in no hurry to move. Denton County was sitting on 2.1 months of inventory in January. Average days on market for a Denton area home was 51 days. Average percent of list price edged up to 95.4 percent.
Battle Between QRA and the Fed’s QT
The housing market has been jerked around over the last several months. The battle between the Federal Reserve’s quantitative tightening efforts have been more than offset by the U.S. Treasury’s QRA funding mechanism. This has resulted in very loose financial conditions, with little stop in consumer spending. The stronger-than-expected economy and labor markets have prevented mortgage rates from moving lower.
There are plenty of real estate practitioners and loan officers screaming for lower rates. The market has had other ideas. The real estate market isn’t the only sector struggling with the distorted economy.
With higher rates, interest on the federal debt continues to skyrocket. Uncle Sam’s bill for the spiraling debt is eating an increasingly larger portion of the annual budget. Projections show interest expenditures on the debt could exceed both Medicare and defense spending in 2024.
Consumers Keep Spending While They Have Jobs
The labor market hasn’t cracked yet. According the headline numbers job growth may be trending higher in 2024. The January employment report show payrolls in the U.S. climbed by 353,000. That was way above most economists estimates. Job growth an wage growth still show a strong element of embedded inflation in the U.S. economy.
Housing Market Still in Flux
If you are a buyer or a seller in the Denton County real estate market, this could be good news or bad news. The housing market is still a distorted mess in many respects. On one hand, the market has been great for sellers and new home builders. On the other hand, the North Texas housing market is still very challenging for prospective buyers.
If you need a competent real estate profession to help you navigate the ups and downs, we’re here to help.
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