September 2, 2022
Large-scale expansion continued in the Dallas-Fort Worth economy in July. Payroll employment grew at a rapid pace, supporting growth in the Dallas and Fort Worth business cycle indices. Home sales fell for the sixth straight month. Home price appreciation remained strong in the second quarter and housing affordability plunged due to a sharp rise in mortgage rates.
Robust job growth continues
DFW employment rose an annualized 8.5% (27,700 jobs) in July, faster than June’s 3.1% increase. Payrolls in the leisure and hospitality sector showed the fastest growth, followed by information services, education and health services, and construction and mining. Employment levels increased 6.0% (14,400) in the Dallas–Plano–Irving metropolitan division and 14.9% (13,300) in Fort Worth–Arlington. Two and a half years into the pandemic, DFW employment exceeds the February 2020 peak by 6.4% (245,400 jobs). Employment in the metropolitan Dallas-Plano-Irving division was 7.2% (198,100) higher than pre-pandemic levels, and employment in the Fort Worth-Arlington division was 4.3% (47,300) higher at pre-pandemic levels (Chart 1). The payroll in Texas was 4.1% higher than its pre-pandemic peak.
DFW’s labor market remained tight, with unemployment near pre-pandemic lows. In July, the unemployment rate remained stable at 3.5% in Dallas and fell slightly to 3.6% in Fort Worth (Chart 2). The unemployment rate in Texas fell to 4.0% in July, while in the United States it rose to 3.7% in August. The labor force grew 2.4% annualized in Dallas and 2.1% in Fort Worth, in line with the state’s 2.3% rise.
Business cycle indices
The Dallas and Fort Worth business cycle indices continued to rise in July, marking their 26th consecutive month of increases. The growth of the indexes was stimulated by solid and sustained employment gains in the metropolis. The Dallas index climbed 7.1% annualized and 16.7% from its pre-pandemic peak (Chart 3). The Fort Worth index rose 14.6% at an annualized rate, surpassing its pre-pandemic peak by 7.2%.
Sales of existing homes fall further
DFW existing home sales contracted for the sixth straight month in July, down 4.3% (Chart 4). Statewide, existing home sales fell at a similar pace, down 4.6%. Year-over-year in July, sales were down 11.5% at DFW and 12.7% at Texas. According to business contacts, sales of new homes have also slowed considerably, tempered by higher mortgage rates and record prices. Cancellations are on the rise and incentives are becoming more widespread. DFW existing home inventory hit 1.8 months of supply, but remained just below the Texas average of 2.2 months.
Home prices are appreciating rapidly
Home prices in DFW have risen at a near-record pace, according to the Federal Housing Finance Agency’s buy-only home price index. Year-over-year price increases in the second quarter were at or near all-time highs, up 25.6% in Dallas, 23.2% in Fort Worth, 20.5% in Texas and 17.7% in the United States (Chart 5). Prices rose at a rapid pace in the second quarter, rising 6.3% in Dallas and 5.7% in Fort Worth. The United States and Texas also saw rapid price increases of 4.0% and 5.2%, respectively.
Affordability plunges in second quarter
Housing affordability plunged in the second quarter due to a combination of high house prices and rising mortgage rates (Chart 6). In Dallas, the share of homes sold that the median-income household could afford fell from 51.3% in the first quarter to 31.9% in the second. Affordability in Fort Worth fell 20.3 percentage points to 32.7% in the second quarter. The decline in affordability was steeper in DFW compared to the United States, where affordability fell by 14.1 percentage points. In July, the median real home sales price edged down to $404,284 in DFW, although the year-over-year appreciation was marginally high at 7.5%.
NOTE: Data may not match previously published figures due to revisions.
About the Dallas-Fort Worth Economic Indicators
Questions can be directed to Laila Assanie at [email protected] Dallas-Fort Worth Economic Indicators is released monthly after the release of state and metro employment data.