As 2025 nears end and we head into the first quarter of 2026 in Dallas-Fort Worth, several key forces will shape the residential sale market: tight but improving inventory, elevated mortgage rates weighing on affordability, ongoing population and migration growth and a shift toward a more balanced market, rather than the extreme seller’s market of recent years.

Inventory and listing activity

Inventory in many parts of Texas, including DFW, is higher than pandemic-era lows but still modest relative to demand. One forecast for Texas noted that by the 12 months ending summer 2026, single-family home sales are expected to grow 2%. 

For first quarter 2026, expect the following:

• A modest increase in the number of homes listed, as some sellers who delayed listing in 2023 and 2024 decide to move in spring. This uptick will provide more options for buyers.
• Because inventory remains relatively constrained and DFW continues to attract relocations and job growth, homes that are well located, well priced and well conditioned will still move relatively quickly.
• Homes in less desirable locations, older condition or with higher price points may sit longer than they did during the seller-rush era; thus, days on market will likely increase relative to 2021 and 2022, but not dramatically.

Price movements and buyer behavior

Home prices in DFW are projected to see modest growth rather than the double-digit increases of the boom years. One local forecast indicated that North Texas 2026 home-price appreciation would be modest, perhaps in the 2% to 3% range, given current affordability constraints.

Thus, for Q1:

• Expect median sale prices to either hold steady or increase modestly (low single-digit percent) in many suburban and high-demand markets.
• In more price-sensitive sub-markets (older inventory, farther out locations), price growth may be flat or even slightly down as buyers shop more carefully.

Affordability and mortgage rate influence

One of the biggest wildcards in Q1 will be mortgage rates and how that affects buyer demand. While many hope for dramatic declines, forecasts suggest rates may stay elevated above historic lows for some time. For example, state-wide projections in Texas suggest 30-year fixed rates might still hover around 6% into 2026.

For DFW in Q1:

• Buyer affordability remains a key constraint. Higher monthly payments (due to rate and price) will limit the pool of eligible buyers, especially first-time buyers.
• Buyers who are well-qualified, relocating or bringing strong equity will dominate early listings.
• As rates stabilize (or moderately decline), purchaser confidence should improve, which may create a boost in contracts written later in the quarter.

Demand and migration tailwinds

Dallas-Fort Worth continues to benefit from strong in-migration, job growth and corporate relocations — all factors that underpin long-term housing demand. DFW remains attractive to buyers relocating from higher-cost states, helping sustain demand even while affordability tightens.

In Q1:

• Expect relocation and move-up or trade-up buyers to be active, particularly in suburbs with amenities, good schools and new-home inventory.
• First-time buyers will be present but may be more cautious. Some will remain renting longer or purchase smaller or less expensive homes.
• Investor activity may remain muted compared to the boom years, but the single-family rental conversion market may continue to influence some neighborhoods.

Market sentiment and strategic implications for Realtors

For Realtors working in DFW, the environment will be more balanced than the extreme seller’s market, but still favorable to well-prepared sellers and disciplined buyers. Some key strategic talking points:

• Encourage sellers to price realistically and ensure their home is in move-in ready condition, since buyer tolerance for repair-neglected homes is lower.
• For buyers, highlight the importance of pre-approval, understanding total cost of ownership (mortgage, plus taxes, plus insurance) and being ready to act when a well-priced home appears.
• Emphasize the value of location, home condition and timing — in a moderated market, these attributes separate the winners from the others.
• Educate first-time buyers about tightened affordability and explore alternatives (e.g., emerging suburbs, smaller homes, longer-term rental to ownership plans).
• Monitor rate movements closely. Any decline in mortgage rates could accelerate contract activity and shorten listing times, so timing and responsiveness matter.

Bottom line

Heading into the first quarter, we can anticipate a more moderate pace of home sales — not the frenzied growth of the boom years, but also not a collapse. Instead, we’ll see a market of steady demand, modest price growth and some beneficial shifts toward buyer choice. For Realtors, the key will be helping clients navigate this “new normal” by focusing on preparedness, condition, pricing and strategy, not just relying on strong macro momentum.

Johnny Mowad is 2025 president of the MetroTex Association of REALTORS®.