Dallas is one of the few cities in the nation where home prices are still rising slightly, according to a national housing survey released Tuesday.

While U.S. home prices fell 3.2 percent in the second quarter, Standard & Poor’s quarterly housing index reports that the Dallas metropolitan area was one of only five markets in the country with price gains.

Of the 20 cities it surveys, only Dallas, Seattle, Portland, Ore., Atlanta and Charlotte, N.C., had annual gains in home prices in the second quarter.

But it’s hard to say whether the 1.6 percent gain in Dallas home prices is sustainable, industry experts say.

“We still could see some hiccups in the North Texas housing market,” said Dr. William Brueggeman, director of SMU’s real estate department. “Right now even Dallas is getting painted with the broad housing-bubble-and-foreclosure brush.”

Housing analysts say North Texas avoided the overheated home prices that became common in other parts of the country, such as Southern California, Las Vegas and Florida.

“We came into the housing rally late in the game,” Dr. Brueggeman said. “That’s served us well.”

The median home price in June nationally was $230,100. In the Dallas-Fort Worth area, it was $150,000.

Still, North Texas has one of the highest home foreclosure rates in the country and is vulnerable to the shakeout in home lending, analysts say.

“I wouldn’t go running down the street singing and dancing just yet,” said Dr. James Gaines of Texas A&M University’s Real Estate Center. “The big risk is if we have any kind of economic slowdown or recession – if we start having job losses on top of the mortgage problems.”

That would reduce demand at a time when the inventory of houses on the market in North Texas is starting to rise.

At the end of July, the Dallas-Fort Worth area had about a 6.6-month supply of pre-owned homes on the market. The nationwide figure is about a nine-month supply, according to the National Association of Realtors.

The Washington, D.C.-based Realtors group said this week that the national home price slide is the worst on record. And the report Tuesday showed the steepest rate of decline since Standard & Poor’s began compiling its housing index in 1987.

Many analysts say the decline is far from over.

“The pullback in the U.S. residential real estate market is showing no signs of slowing down,” Robert J. Shiller, chief economist at MacroMarkets LLC, said in the Tuesday S&P report.

The number of homes for sale in Dallas-Fort Worth was up about 5 percent at the end of July compared with a year earlier, and sales were down 6 percent for the first seven months of 2007.

“Will the sky fall here? I don’t know,” Dr. Gaines said. “In a lot of places in Dallas, home prices are still going up by double digits.

“In other neighborhoods, they are actually falling. But across the board, the gainers outweigh the losers,” he said.

As mortgage lenders tighten loan requirements, a significant number of potential homebuyers have been locked out of the market. That could hurt the volume of sales in North Texas in the months ahead.

“It may take awhile to sort out” what’s happening in the mortgage market, Dr. Brueggeman said. “There is going to be a little pain and suffering here, but nothing like we are seeing in other markets.”

Dr. Gaines says that even with the soaring foreclosure rates, there have been fewer subprime mortgage problems here.

“The mortgage shakeout is affecting other parts of the country a lot more than it is Texas,” he said. “We didn’t have anywhere near the level or magnitude” of subprime loans that other markets did.

But that doesn’t mean that Dallas-Fort Worth homeowners aren’t going to be hammered with a steady diet of bad news about the U.S. housing market. Those negative reports weigh on consumer psychology.

“If I am thinking about buying a house now, I may be worried about downward movement and wait,” Dr. Brueggeman said. “You are always concerned about buying at the peak.”

Source:

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