Mary's Market Watch: Q3 2025

Picturesque Turtle Creek during the fall in Dallas

The Broad Strokes

Do you have a Ouija Board or a Magic 8 Ball?

We could all use one to predict the future in these remarkably uncertain times!

The stock market is going gangbusters characterized by periodic sharp swings and the AI boom, while our government is amidst one of the longest shutdowns in history. We have strong earnings reports and low unemployment, but tariffs and trade tensions increase volatility and lower consumer confidence. Negative headlines and the unpredictable nature of geopolitics are fueling ongoing instability. 

One thing is certain: real estate is a barometer of the market.

The good news is that from all indicators, the real estate market appears to be moving toward more balanced conditions with moderated buyer activity, larger inventory, longer sales cycles and lower mortgage rates.

Trends in Homeownership 

While part of the American dream has historically been homeownership, this may be starting to change as the number of renters has started to surge. At 65%, the U.S. homeownership rate recently dipped for the first time since 2016 by a modest 0.1% as renter households increased buy 2.6%. (Source: Katz, Lily, “U.S. Homeowner Population Stops Growing for First Time in Nearly a Decade,” Redfin News, September 3, 2025.)

Below are some interesting characteristics that distinguish current homeownership.

• Homeownership among seniors is declining as the fastest-growing group of renters is those 55 or older. (Source: Ciuntu, Alexandra, “U.S. Senior Rent Like Never Before: 65+ Age Group Up 2.4 Million Renters in a Decade,” Point2Homes, June 17, 2025.)

• Millionaire Millennials (people born between 1981 and 1996) are more apt to rent, whereas millionaire Gen Xers (people born between 1965 and 1980) are more likely to opt for homeownership. (Source: Dragos, Adina, “1 in 11 Millionaires Now Rents, Southern Metro Areas Become Hotspots for Luxury Living,” RentCafe Blog, June 4, 2025.NAR 

• First-time buyers made up 24% of all home buyers, a decrease from 32% last year. more than 70% of first-time buyers were Younger Millennials.

• Baby Boomers (people born between 1946 and 1964) dominate the sales market as both buyers and sellers, outpacing the Millennials. Almost half of the Baby Boomers make their home purchase in cash.

• Seventeen percent of home buyers purchased a multi-generational home for cost savings to take care of and spend time with aging parents, and because children over the age of 18 were moving back into the home.

(Source: “2025 Home Buyers and Sellers Generational Trends Report,” National Association of REALTORS® Research Group, 2025.)

A Deep Dive into the Data

U.S. Real Estate Market

In big news, the Federal Reserve cut interest rates by 0.25% on October 29, which represents the second rate cut this year. By lowering borrowing costs, the Fed’s rate cut should incentivize more borrowing and thus more spending, which, in turn, should heat up the economy. Another meeting is slated for December, but it remains to be seen if the Federal Reserve will continue to carve away at interest rates during 2025.

• Mortgage Rate.  As of October 29, 2025, the rate for a 30-year fixed mortgage is 6.27%, which is down from 6.75% on July 30, 2025. While many anticipate lower mortgage rates, these rates do not march in lockstep with the interest rates. The surge in mortgage rates right after the Federal Reserve announced their most recent rate cut exemplifies this fact. (Source: Graham, Matthew, “Yet Again, Mortgage Rates Surge Higher After Fed Rate Cut,” Mortgage News Daily, October 29, 2025.)

• Home Sales, Price and Inventory. Sales of existing homes increased by 1.5% in September, while the number of homes on the market increased by 14.0% year-over-year. The average months’ supply is 4.6, up from 4.2 in September 2024. A balanced market has 6.0 months of inventory. The median sales price increased by 2.1% to $415,200 year-over-year in September 2025. (Source: “NAR Existing-Home Sales Report Shows 1.5% Increase in September,” National Association of Realtors, October 23, 2025.)

The Texas Economy

In Texas, the real market is becoming more balanced. The median home price declined, while active listings or more inventory increased. These developments along with lower mortgage rates translated to an increase in sales.

• Median Home Price. At $330,000, the median home price in Texas decreased by 1.9% from September 2024 to September 2025. Home prices on average have been modestly declining in Texas since midyear.

• Active Listings. This figure increased by an impressive 20.9% to 153,154 in September 2025 year-over-year. 

• Closed Sales. There were 28,268 closed sales in September 2025 up by 7.6%.

• Inventory. Months of inventory is 5.5 in September 2025, up from 4.7 months in September 2024. As a reminder, a balanced market between buyers and sellers is 6.0 months.

• Days on Market. June had 100 days on market, which is 6 days more than in September 2024. 

(Source: “September 2025 Texas Housing Report,” Metrotex, October 2025.)

DFW Residential Real Estate Sales

With inventory in DFW remaining relatively high, home prices have declined. More listings, a longer sales cycle and lower home prices naturally have spurred more sales as mortgage rates have eased.

• Median Home Price. Down from $405,000 in June 2025, the median home price in DFW was $389,715 in September 2025. This represents no increase (0.0%) from September 2024.

• Active Listings. This figure increased by an impressive 18.6% to 35,465 in September 2025 year-over-year. Inventory remains high.

• Closed Sales. There were 7,666 closed sales in September 2025 up by 5.3% year-over-year.

• Inventory. Months of inventory was 4.6 in September 2025, up from 4.0 months in September 2024. Again, a balanced market between buyers and sellers is 6.0 months.

• Days on Market. June had 94 days on market, which is 8 days more than in September 2024. 

(Source: “September 2025 DFW Housing Report,” Metrotex, October 2025.)

Commercial and Multifamily Market

The commercial and multifamily market is recovering and stabilizing. The commercial market in DFW is outperforming many markets in the country. The office submarket has seen greater demand with leasing totals returning the pre-Covid levels. Retail and the industrial submarkets remain strong and have been buoyed by population growth and corporate relocations. (Source: “Dallas-Fort Worth Commercial Real Estate Market Report: September 2025 Analysis & Outlook,” M&D Real Estate Group, September 24, 2025.)

The DFW multifamily market has been affected by an oversupply of new units. As a result, annual rent growth has slightly declined, and vacancy rates have exceeded 10%. The multifamily pipeline has also decreased to 30,000 units under construction, which is the lowest level since 2015. Thanks to population growth, demand continues to be strong as the market is on pace to absorb these new units. Without question, it is a good time to be a renter while new properties offer ample concessions. However, the direction of the winds may soon change as the new inventory dries up over the next year or two. (Source: “Dallas-Fort Worth, TX Multifamily market Report Q3 2025,” Matthews Real Estate Investment Services, October 6, 2025.)

New-Home Construction 

New-home construction experienced mixed results due to higher tariffs and easing mortgage rates. New-home starts are on the decline as new-construction homes continue to sit on the market and builders pile on incentives for buyers. As a result, profits for builders have diminished here and elsewhere. 

In DFW, job growth has eased, and there is an oversupply of new-construction homes. According to Residential Strategies Inc., a Dallas-based market research firm, new home builders cut housing starts by 20%, while many builders have experienced a 20-30% drop in traffic and sales. With more vacant homes on the market, fewer new homes will be started and built in 2026 unless major changes occur in the marketplace. (Source: Wooten, Nick, “New homes in North Texas sit empty as builders slow pace,” Dallas Morning News, October 10, 2025.)

Food for Thought

Many people struggle with the question of whether to rent or buy. There are many variables to consider, including timing and borrowing costs (if a purchaser is getting a loan).

Financially, buying a property may allow you to build equity and get certain tax benefits. If you choose to rent, you forego unexpected maintenance costs, the risk of your home value declining and the burden of paying property tax, homeowners insurance or homeowners association fees. Rent can also be less expensive than a mortgage payment, depending on the market and mortgage rates.

Renters typically have more financial certainty, less responsibility and more freedom to move around, while homeowners can make their home their own, update their home as they wish and even lease out their property. There are certain risks to homeownership like inflating costs, but then again, homeowners can build wealth with their real estate investment, which historically tracks with inflation. The greatest impediment to a home purchase is often the upfront costs.

Ultimately, renting versus owning your home is a highly personal decision. Real estate is not a highly liquid asset, but it is considered a sound investment, particularly if one wants to diversify their portfolio of assets.