Strong sales volume coupled with relatively few additional homes being offered for sale resulted in the overall supply of pre-owned northwest Dallas suburban homes available for sale to again fall in May. The current 4.3 months supply of homes available for sale is half the 8.6 months supply of homes available in January. May also was the fifth straight month that total pre-owned home supplies were lower than during the previous month.

Home sales volume was again up sharply. Remarkably, May's very healthy 18.7 percent increase in pre-owned home sales, as compared to the number of homes sold the same month a year ago, is less than both the revised 44.7 percent increase in sales reported in April and March's 24.0 percent increase. During this three month period, a total of 371 more pre-owned homes were sold in Southlake, Colleyville, Flower Mound, Coppell, southwest Frisco, west Plano, Keller, Highland Village, Westlake, Grapevine, Trophy Club, Argyle, Double Oak, Bartonville and Copper Canyon than during the same three months last year, an extraordinary 28.1 percent sales volume increase.

During this same period, the overall number of homes available for sale in this area increased much more slowly than home sales. From April to May, the average number of pre-owned, single family homes listed for sale increased by only about 3 percent, from 2,568 to 2,646. From March to April, the number of these homes that were listed for sale increased by 145, an increase of just under 6 percent.

Sales continue to be strongest in the higher priced market segments. During the past three months, 12.2 percent of the homes sold were priced at $500,000 and up. This represents a 33.7 percent increase over the 8.1 percent market share these homes had a year ago. Homes selling for $400,000 to $499,999 accounted for 8.9 percent of total sales, up 29.9 percent from the previous year. The $300,000 to $399,999 market segment captured 16.1 percent of total sales, a 10.9 percent annual increase in market share. Houses priced between $200,000 and $299,999 accounted for 31.2 percent of homes sold, essentially the same as the previous year. About the same percentage of homes, 31.5 percent, sold for under $200,000, a 17.5 percent decrease in market share.

It seems logical that such market conditions already would have begun to push home prices up fairly substantially. This, however, is not the case. Home prices, measured by price per square foot, continue to inch up slowly. For the three months ending in May, the price per square foot of the typical $250,000 home sold in this area was $88.14, up .6 percent over the same period a year ago. The typical $350,000 home sold for $100.06 per square foot, up .8 percent over a year ago, and price per square foot of the typical $450,000 home was up .5 percent, to $113.62.

Prices probably have remained relatively flat so far principally because home sellers still are coping with much longer than average listing periods. While average days on market of sold homes have fallen during each of the past five months, at the current average of 90 days, they still are 50 percent higher than they were a year ago and 80 percent higher than they were two years ago.

Assuming that the supply of homes available for sale continues to grow smaller and demand stays strong, it seems likely that over the next several months average days on market will begin to fall more precipitously and seasonally adjusted prices will begin to rise. How fast and to what extent these changes will occur, however, is beyond my ability to predict.