Essentially all indicators are now showing what may be the beginning of a rebound in the northwest Dallas suburbs existing home market. The total number of pre-owned homes sold in this area during February was up 4.2 percent over same month sales a year ago. For the past 12 months, sales volume is up 6.4 percent.

Even better news for home owners who in recent years have seen little or no appreciation in the market value of their homes is that prices also may be starting to trend up. The average price for which these homes sold was up more than 10 percent and their average price per square foot was up more than 5 percent.

Also, the inventory of homes available for sale dropped to a 7 months supply in February, down more than 18 percent from January's revised 8.6 months supply. This decrease is the result of sales volume being up and an only modest increase in the total number of active listings. While average days on market remains extremely high at 114 days, this is essentially the same as the average 115 days that homes which sold in January were listed for sale.

The increase in average price per square foot draws special attention because it is occurring across the entire range of home prices. Despite the market dip we experienced in January, for the past quarter the price per square foot of the typical $150,000 home sold in the area covered by this newsletter was $78.80, up 1.2 percent over the same period a year ago. The typical $250,000 home sold for $86.88 per square foot, up 1 percent, and the typical $350,000 home sold for $99.90, up .7 percent. The price per square foot of the typical $450,000 home rose to $114.07, a 5.5 percent increase, and for the typical $550,000, the price per square foot was up .9 percent to $126.80.

February's per square foot price increases also were up pretty much across the board. Over the past year, prices for the typical $150,000 home rose .9 percent to $79.87 and $250,000 homes were up 4.8 percent to $88.61. The typical $350,000 home sold for $102.59 per square foot, up 2.9 percent over a year ago, and the typical $450,000 sold for $113.73, just about the same as a year ago. The square foot sales price of the typical $550,000 reached $127.85, a 1.2 percent annual increase.

The particular strength of higher priced market segments also is apparent in the sizable growth in the number of these properties being sold. During February, the number of homes sold for more than $500,000 jumped 64 percent over 2003 sales and the number of homes sold for $400,000 to $499,999 was up 15 percent. In contrast, the number of homes selling for less than $200,000 was up 4.5 percent and the number of homes selling for $200,000 to $299,999 and $300,000 to $399,999 were down 6.4 percent and 11.1 percent, respectively.

Given these market trends and the growing optimism about the overall economic conditions, both nationally and locally, it seems plausible that the northwest Dallas suburbs pre-owned home market may be entering the early stages of a fundamental market shift. Buyers, who generally have long held the upper hand in this market, should consider that at minimum the market may begin moving toward a more neutral position.

There is little doubt that homes here are priced significantly lower than they are in many similar markets around the country. If the Dallas Fort Worth area begins experiencing an even moderate net influx in the number of homebuyers, the actions of newly arrived buyers who see "bargains everywhere" could trigger an even more substantial and rapid shift from its current bias.

Corrections to average per square foot price information posted 4/10/2004.