Jun. 12—Signs suggest the red-hot local real estate market may be starting to cool.

According to a recent market update by Rockwall-based M&D Real Estate, signs are pointing to shifts in the local market.

Price appreciation in the national and DFW-area real estate market has skyrocketed the past two years, leading to record home prices throughout the North Texas region. In Hunt County, the median sales price of a single-family home went up 29% from 2021 to 2022, according to the Hunt County Central Appraisal District. And the Rockwall County Appraisal District reported a similar increase in values.

Several market factors, however, signal that values may start to level out in the months to come.

Back in March, a team of economists with the Dallas Federal Reserve produced a report suggesting a bubble was beginning to form in the area housing market.

According to the report by M&D, home sales spiked two weeks ago in the DFW area with 41% more homes listed for sale than the same time last year as sellers fear they may miss out on the red-hot market.

"In fact, we saw more homes listed for sale in the area in April 2022 than we have in four years," said M&D in a news release.

Just last week, M&D realtors reported seeing other signs of a cooling market, such as open houses with little to no attendance, a slowing pace of offers coming in, and a growing inventory of homes for sale. There were 100 percent more homes on the market for sale this past month in Rockwall County than there was this time last year. In January, there was less than one-month supply of inventory. This month, there is 1.8 months supply, according to NTREIS Trends.

Also of note, mortgage demand has fallen to the lowest point since 2018 nationally, with 14% less people applying for a mortgage than this same time last year, according to the M&D report. In addition, Interest rates have been rising with the 30-year now at around 5.5%, up from 3.29% since December 2021."

"Some who have been on the fence about selling may have cause to worry the red-hot housing market might soon slow down somewhat, and are opting to get in while the getting is still good. No one can say, but we have seen this lately with interest rates rising," the M&D press release stated.

"Buyers may be still seeing high prices, of course, but you may be fighting against less bidders and offers than there were for a home now than even just a couple of months ago. The consensus? Over the next couple of months, inventory should build giving more buying opportunities," according to M&D.

Despite the recent signs of a cool down, the market still is ripe for sellers due in part to continued population growth and other factors, said M&D.

Nevertheless, a combination of higher interest rates, buyer fatigue, and, in some case, over-priced homes are producing drag on the market, according to M&D.