Jul 11, 2022 - News

Mortgage rate hikes hurting North Texas housing demand

Two new houses under construction
Even as demand drops slightly, new houses continue to go up all over North Texas. Photo courtesy of Cormac West

As mortgage rates have ticked up, demand for homes has pulled back slightly, easing price growth, slowing sales, boosting inventory and increasing the share of listings with a price cut, according to a market report from Zillow.

Why it matters: Before rate hikes in May, housing affordability had fallen to a 15-year low, per Zillow. As the market begins to cool, prices will go up slightly slower than they have the last two years.

By the numbers: The typical home value in North Texas is $390,505, according to the Zillow report, up 30.3% year over year and 52.5% since 2019

  • Mortgage payments on a typical home are $2,657 a month. That's up 57.8% compared to May 2021 and 4.2% over April of this year.
  • Typical rents are $1,791, up 17.7% since May 2021.
  • The share of listings with a price cut has gone up to 10.2%, compared to 6.9% in April.

Zoom out: Mortgage payments are higher than rent in 45 of the 50 largest U.S. metros, up from 22 in 2019.

  • Inventory across the country continues to recover from February lows, but it's still 50% below 2019 levels.

Between the lines: The question lingering for anyone buying or selling a house right now is whether this is a sign of a housing bubble.

  • A paper from the Dallas Fed earlier this year said the U.S. has a housing bubble "brewing."
  • An editorial in the Dallas Morning News last month said North Texas will be "the epicenter of the bubble."

What they're saying: Zillow economist Nicole Bachaud says in the report that the company expects the mortgage rate hikes will "quicken the market's needed rebalancing."

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