Navigating the Shift: Is the Market Finally Cooling?

Inventory growth is uneven across the country. The West and South have seen massive increases in inventory (38.3% and 29.4% respectively in June), with many metros in these regions now exceeding pre-pandemic levels. Conversely, the Northeast and Midwest have experienced slower growth (17.6% and 21.3% respectively) and still lag behind pre-pandemic inventory levels.

Just in Dallas County alone, when comparing inventory to 1.5 years ago, the inventory has increased from 2.6 months of supply to 4.8 months. Months of Supply displays how long it would take for all the homes currently on the market to be sold. If no new homes were added to the inventory and the current sales pace continued.

Months of Housing Supply increase in Dallas County

Elevated interest rates have left buyers on the sidelines causing a surge in supply

1.      Higher Interest Costs: A mortgage payment is calculated using a formula (amortization) that determines how much of each payment goes toward the principal (the loan amount) and how much goes toward interest (the cost of borrowing). When interest rates are higher, a larger percentage of the monthly payment is allocated to interest and less goes toward paying down the principal in the early years of the loan.

 2.        Increased Overall Cost of the Loan: Even a small increase in the interest rate can result in a significant difference in the total cost of the loan over a 30-year term. For example, a 1% increase in the interest rate can add tens of thousands of dollars to the total amount paid over the life of the loan.

 3.      Affordability Thresholds: Lenders determine how much a borrower can afford based on their debt-to-income (DTI) ratio. As interest rates rise, the monthly payment for a given loan amount increases, which can push a borrower's DTI ratio higher. This means that to stay within affordability guidelines, a buyer must either reduce the price of the home they are looking at or make a larger down payment.

4. The "Affordability Squeeze": Because both home prices and interest rates have been high, many prospective buyers are facing an affordability squeeze. The combination of high prices and elevated rates has made the monthly payment on a typical home almost double in recent years.

 Local Market Spotlight: DFW Housing Trends

Prices have remain stable in Dallas County. As of June 2025, when comparing median home prices to Jan 2024, prices have increased on average $20,000 USD equaling a 2.3% increase in value.

Sales Price Increase Dallas County

As of June 2025 in the city of Dallas, out of 3,265 active listings, roughly 450 properties have either expired or the seller decided to cancel the listing equaling an estimated 15% of cancelled listings. Sellers are not receiving the offers they anticipated, and rather than accept a lower price, they choose to delist. They're effectively saying, "If I can't get my price, I'd rather not sell."

Cancelled/Expired Listing in Dallas

Although prices have remained stable, the market is beginning to cool due to higher mortgage rates and increased inventory. Buyer demand is beginning to soften.

What this means for prospective buyers

Most experts agree that 5 to 7 months of supply is considered a balanced market. As inventory increases, buyers today have more options and more room to negotiate than they did in the past.  

After years of fierce competition, the market is seeing a notable rise in the number of homes for sale. This gives buyers more options and less pressure to engage in bidding wars. Consequently, sellers are becoming more willing to negotiate on price and offer concessions (like help with closing costs), providing opportunities for a better deal than previously possible.

 In summary, while the current real estate market presents a more favorable environment for buyers with increasing inventory and greater negotiation leverage, the timing for buying a home remains a deeply personal choice. It's about aligning market opportunities with your unique financial stability, long-term goals, and personal desires to ensure that homeownership is a truly beneficial and sustainable step for you.