Once-scorching housing market now in free fall

Daily Mail​

16 hours ago

Supply just keeps growing while demand is receding for homes in this once-scorching housing market. The Lone Star State has been building more new homes than almost every other state over the past few years, and the real estate market has finally hit a breaking point . The explosion in housing inventory amid dwindling sales has put Dallas, one of the hottest housing markets during the pandemic, on orbit to crash.
The Texas city was one of only 10 metros across the country where home prices fell in the four weeks ending on May 18, reports Redfin. It was a year-over-year drop of 3.4 percent. The market reversal is a correction of the pandemic homebuying frenzy, when the city was a hotspot due to its affordable homes and thriving job market. Many of the homebuyers were able to work remote and had high incomes.
With average salaries of $167,000, those buyers were often able to outbid locals, which drove regional home prices up. Investors had also purchased when mortgage rates were low and they could make a rental income. Due to high demand, the median price of a home in Dallas went from $340,000 in 2019 to a peak of $485,000 in May 2022.
The current surplus of inventory would make it a buyer's market, but worry over high mortgage rates and the economy is holding people back. Now, price drops are expected in Dallas — the city where John F. Kennedy was assassinated in 1963 while riding in a presidential motorcade through Dealey Plaza. At the moment, home prices in Dallas are still higher than tamy in CC again it didn't stick.
They were before the pandemic, but cuts are coming, housing economist Amy Nixon told the Daily Mail. 'The Dallas job market is strong and relies heavily on H-1B visa workers. That is why it had been drawing so many foreign homebuyers,' she said. 'From 2020 to 2024, more people moved to Dallas directly from a foreign country than from any other domestic state in the US.
'However, many of these jobs are in tech, an industry undergoing layoffs that also has the looming threat of AI.' Nixon added that given the current administration and Donald Trump's ICE raids, there is also a question of how much immigration, both legal and illegal, is going to slow down in the coming years. For both reasons, people now are in a rush to sell in the city.
But listings are spending seven more days on the market before going under contract, compared to in 2024. As the surplus of current listing grows, Nixon says stubbornly high mortgage rates, a slowdown in domestic migration, and widespread tech layoffs, will only cause prices to be slashed even more. Now there are five times more active listings in Dallas today than there were in 2021, according to housing market research firm ResiClub.
There were 29,084 homes listed for sale in Dallas-Fort Worth-Arlington in May 2025. In May 2024, there were just 6,010. Property taxes have also risen in Dallas over the past few years, and residents pay 41 percent than they did five years prior, according to Redfin. 'Many existing homeowners are putting their houses up for sale, looking to move to lower cost of living areas or escape the now-crowded metroplex,' Nixon said. Homes in Dallas are now being sold only after the seller slashes the price. According to Redfin, 33 percent of homes sold with price drops in April 2025.
But there is a silver lining, according to Nixon. 'Unlike during the pandemic, there is plenty of rental inventory available, and rents are even falling in several submarkets,' she said. 'Eventually, I think the housing market will recover, but it's going to require some combination of lower home prices and lower mortgage rates.' Meanwhile, the rest of Texas is also headed for trouble.
The state saw the most cities with falling house prices over the last year. Prices in San Antonio have dropped 1.8 percent since last April, Austin has seen a 1.2 percent fall and prices in Fort Worth have dropped 0.2 percent. Moving to Texas is also less attractive than it used to be because of the increasing frequency and intensity of climate disasters such as hurricanes. This has led to skyrocketing insurance premiums and rising HOA costs across many major cities.