Is It a Good Time to Buy a House in Dallas?

Purchasing a home is a substantial financial decision. The Dallas housing market presents a complex interplay of dynamics and economic factors. This analysis provides a clear perspective on the market, its economic underpinnings, and financial considerations for prospective buyers.

Dallas Housing Market Overview

The Dallas housing market is currently experiencing a notable shift, moving towards a more balanced environment for buyers. In May 2025, the median close price for homes in the Dallas area was approximately $399,000, with the average sales price reaching around $516,731. These figures represent a slight year-over-year decrease, indicating a cooling trend after periods of rapid appreciation. The median price per square foot stood at $195.71, while the average was $211.52.

Housing inventory has significantly increased, offering buyers more options and reducing competition. Active listings in May 2025 were approximately 29,000. Months of inventory rose to 4.7 months from 3.5 months, reaching 4.83 months in June 2025. This is the highest inventory level in over a decade, signaling a shift from a strong seller’s market.

Sales volume dipped slightly, with 9,195 sales in May 2025, a 2.51% decrease from May 2024. Homes are also staying on the market longer, with average days rising from 75 to 86. This extended period allows buyers more time to evaluate properties. The market’s current state, with increased inventory and slightly lower prices, indicates a healthier adjustment. This shift means 66% of homes are selling below their initial list price, which benefits negotiators.

Economic Factors Driving Dallas Real Estate

The Dallas-Fort Worth metroplex continues to demonstrate robust economic health, which underpins the sustained demand in its real estate market. The region added 56,100 jobs over the past year, reflecting a solid 1.3% growth rate that surpasses many other metropolitan areas nationwide. Specific sectors like education and health services, government, and trade, transportation, and utilities have shown substantial job creation. The Federal Reserve Bank of Dallas forecasts a 1.5% increase in Texas employment for 2025, contributing to a stable job market that supports housing demand.

Population migration strongly favors Dallas, with the metroplex adding 153,000 new residents between 2022 and 2023. The metro area now exceeds 8 million people. This continuous expansion, combined with a strong job market, fuels housing demand and supports regional real estate stability.

Corporate relocations further underscore Dallas’s economic appeal. The city ranked as the number one metro for corporate headquarters relocations from 2018 to 2024, attracting 100 new headquarters. Companies are drawn by lower taxes, tax incentives, market proximity, and hybrid work support. Firms like Charles Schwab and McKesson have chosen Dallas, contributing to a diverse economy. These moves bring jobs and stimulate infrastructure investment, enhancing real estate value.

Financial Considerations for Prospective Buyers

Understanding the financial aspects is paramount when considering a home purchase in Dallas. Mortgage interest rates are a significant component, with the average 30-year fixed mortgage rate around 6.58% as of August 21, 2025. For those preferring shorter terms, the 15-year fixed mortgage average was 5.84%, and a 5/1 adjustable-rate mortgage (ARM) averaged 5.79%. These rates directly impact monthly payments, making it essential for buyers to assess what they can realistically afford.

Several mortgage products are available:
Conventional loans: Require good credit and a down payment; private mortgage insurance (PMI) for less than 20% down.
FHA loans: Offer flexible qualification, including lower credit scores and down payments as low as 3.5%, but involve mortgage insurance premiums.
VA loans: Provide benefits for eligible military service members, often with no down payment.
USDA loans: Assist buyers in designated rural areas.
Jumbo loans: Cater to higher-priced properties exceeding conventional loan limits.

Affordability in Dallas remains a consideration, with the home value to income ratio at 4.1. This suggests the market is overvalued compared to its long-term average of 3.4, though affordability is improving.

Property taxes are a substantial ongoing cost. The City of Dallas tax rate is approximately $0.769691 per $100 of assessed value, and Dallas County’s rate is around $0.215500 per $100. The median effective property tax rate in Dallas County is about 1.74%, and these taxes have increased by 32.7% since 2019. For 2025, proposed rates are $0.703274 per $100 for the City of Dallas and $0.222188 per $100 for Dallas County.

Home insurance costs also vary, with average annual rates in Dallas ranging from approximately $1,832 to $4,945, depending on the insurer and specific property characteristics. Factors such as the home’s location, value, the homeowner’s claims history, credit score, and the age of the home influence these premiums. Home insurance in Dallas is generally more expensive than the national average, reflecting regional risks.

Market Direction and Expert Perspectives

The Dallas housing market is anticipated to continue its trajectory toward a more balanced state, offering a potentially more favorable environment for prospective buyers. Experts predict a slight decrease in home values across Dallas over the next year, with some forecasts suggesting a decline of around 7.3% across the Dallas-Fort Worth area within the next 12 months. This contrasts with earlier periods of significant price appreciation and indicates a market correction.

Increased housing inventory is a consistent theme in expert analyses, providing buyers with more diverse choices and less intense bidding wars. This rise in available homes, coupled with a slight decrease in sales activity, suggests that the market dynamics are shifting in favor of buyers. Mortgage rates are expected to stabilize, potentially averaging around 6.4% in the second half of 2025 and dropping further to 6.1% in 2026. The potential for Federal Reserve rate cuts could further enhance affordability and stimulate buyer activity.

Despite predicted price adjustments, the Dallas-Fort Worth metroplex is a leading real estate market for investment and development in 2025. Some experts anticipate modest home price appreciation of 3-5%, while others foresee continued demand from population growth and job creation. A slowdown in new construction, influenced by higher interest rates and existing inventory, may also benefit buyers of existing homes. This dynamic suggests that while the market is adjusting, its fundamental drivers remain strong, pointing towards long-term stability.