North Texas home sales fell 8 percent in November — the biggest year-over-year sales decline in more than seven years.

Real estate agents sold 7,502 preowned single-family homes in the area last month, according to preliminary data from the Real Estate Center at Texas A&M University and North Texas Real Estate Information Systems.

"The year-to-date sales numbers are not nearly as bad" as November's, said Dr. James Gaines, chief economist with the Real Estate Center. "Once we get December numbers, the year might be down 1 or 2 percent from last year.

"The level of activity is still very much robust," Gaines said. "We don't see the sky falling at all."

With November's sales decline, total purchases of properties through the real estate agents' multiple listing service are down 1 percent for the first 11 months of 2018.

That's the first dip in local home sales since the Great Recession.

The pullback in home purchases in North Texas is so significant that Realtor.com just named the Dallas-Fort Worth area as one of the 10 U.S. home markets with the biggest housing sector declines.

But 2018 is still on track to be North Texas' second-best year on record for preowned home sales.

"We were racing down the highway at 80 miles per hour and now we are doing 65," said Ted Wilson, principal with Dallas housing analyst Residential Strategies Inc.

Wilson blames the shift in the Dallas-Fort Worth home market on rising interest rates.

"Higher mortgage rates have made housing more expensive this year," he said. "We've seen interest rates climb quite a bit in the second half of the year.

"And that's has put a lot of questions in people's minds about where the market is."

The increase in finance costs since last year has added almost 15 percent to the month payments on a home. At the same time, home costs in the area have jumped by more than 40 percent in the last five years. Home price increases have slowed dramatically in North Texas in recent months.

Median house prices in the area rose by only 3 percent in November from a year ago — one of the lowest appreciation rates in years.

More inventory

Wilson doesn't spot the makings of a home price crash in North Texas.

"A lot of people are incorrectly assuming that the prices in this market are going to drop," he said. "We don't see any big bubble bursting."

Along with the slowdown in sales, the number of houses listed with real estate agents in the area has risen by almost a quarter this year from November 2017.

And the average time it takes to sell a house through the multiple listing services has grown 10 percent over last year.

"There is a bit more inventory out there, and things aren't moving as fast as they were," Wilson said.

Even so, there was less than a three-month supply of preowned homes for sale in North Texas in November. A six-month supply is considered a normal market.

Buyer perceptions

The declines in D-FW home sales and slower price appreciation are having a bigger impact on consumers' attitudes than their pocketbooks, analysts said.

"I am more concerned about the psychological impact of not-so-rosy housing news than I am about the actual underlying fundamentals of the housing market in the Dallas-Fort Worth market," said Daren Blomquist, top economist with Attom Data Solutions. "Certainly the data shows that the market has gotten somewhat overheated and is due for a slowdown, but that slowdown should just be a chance for the market to catch its breath rather than a trigger a panic attack.

"Jobs and people are still moving to the Dallas-Fort Worth area in large numbers, which ultimately should keep demand for housing solid," Blomquist said. "But the psychology of the market is more of a wild card and could result in a bigger slowdown or correction."

North Texas home sales would be higher if there were more moderately priced properties up for grabs, Paige Shipp of housing analyst Metrostudy Inc. said.

"I believe the 1 percent decrease in sales this year is due to the lack of homes on the market below $200,000, not a lack of buyers," Shipp said. "D-FW has strong job and population growth, which equates to demand for homes.

"However, the increasing interest rates have exposed the fact that D-FW buyers cannot all afford homes priced above $400,000, she said.

The Dallas area's low unemployment rate and strong economy should keep homebuyers coming to the market in the year ahead, said Frank Nothaft, CoreLogic's chief economist.

"The D-FW area had a solid sales market in 2018, and I expect the sales market in 2019 will come in close to 2018's level," Nothaft said. "Some prospective buyers may feel the monthly mortgage payment for the home they would like to buy is higher than they are comfortable with, and decide to postpone buying for now."