Houston Housing Market: Trends and Forecast 2025-2026

Is the Houston housing market booming or cooling down? The answer, as of June 2025, is a bit of both. While single-family home sales are up and inventory has surged to record levels, affordability challenges persist, creating a complex situation for buyers and sellers alike. In short, the Houston housing market is experiencing a surge in activity fueled by record inventory, but affordability remains a key concern.

As an investor in the Houston area for over 15 years, I've seen the market go through its ups and downs. This latest data from the Houston Association of Realtors (HAR) has me thinking about what it all really means for people in our community. Let's dive into the details, break down the numbers, and discuss what you should be watching for if you're thinking of buying, selling, or just keeping an eye on your investment.

Current Houston Housing Market Trends in 2025

Record Inventory Meets Strong Demand: A Double-Edged Sword

One of the most significant takeaways from the June 2025 HAR report is the unprecedented level of active listings. Active listings were up a whopping 31.8% year-over-year, reaching the highest point ever recorded by HAR. That's great news for buyers, right? More choices, more negotiating power.

Well, sort of. While increased inventory undoubtedly provides more options, it also suggests a potential shift in the market dynamic. Here's a simple breakdown:

• Pros (for Buyers):
  • More homes to choose from
  • Potentially less competition, giving you more time to make a decision
  • Possible price negotiations due to increased supply
• Cons (for Sellers):
  • Longer time to sell a property
  • Increased competition from other sellers
  • Potential pressure to lower prices to attract buyers

The rise in inventory is happening alongside an increase in single-family home sales, which rose 12.5 percent year-over-year in June. This indicates that despite economic headwinds, people are still eager to buy in Houston. The question is, can they afford it?

Price Points: A Tale of Two Markets

The HAR report reveals a crucial distinction between the median and average home prices.

• Median Home Price: Statistically unchanged at $346,651.
• Average Home Price: Increased 4.4% to a record $450,235.

The average sales prices recorded show that the top end of the market had a lot of activity but the bulk of other price points were rather muted.

HAR Chair Shae Cottar with LPT Realty correctly stated that the median price is a more reliable gauge of overall market conditions. The fact that it remained statistically flat suggests that, broadly speaking, prices aren't experiencing significant upward pressure.

However, that record-breaking average price tells another story. It's being heavily influenced by robust sales in the luxury market (homes priced $1 million and above), which saw a massive 40.6% increase. So, while the overall market is stable, the high-end segment is booming.

Here's what that means for you:

• If you're looking to buy a luxury home: Be prepared for competition and potentially higher prices.
• If you're looking to buy a home in a more affordable price range: Take advantage of the increased inventory and negotiate.
• If you're looking to sell a luxury home: This could be a great time to list your property.
• If you're looking to sell a home in a more affordable price range: Be realistic about your pricing and make sure your home is in top condition to stand out from the competition.

Price Range	Year-over-Year Change in Sales
$1 – $99,999	increased 24.0 percent
$100,000 – $149,999	increased 0.6 percent
$150,000 – $249,999	increased 3.4 percent
$250,000 – $499,999	increased 10.6 percent
$500,000 – $999,999	increased 14.2 percent
$1M and above	increased 40.6 percent

Housing Affordability: The Elephant in the Room

Despite the positive trends in sales and inventory, affordability remains a major concern. As HAR Chief Economist Dr. Ted C. Jones points out, home prices are softening slightly due to the lowest affordability in 40 years.

While mortgage rates have dipped slightly (from 6.92% in June 2024 to 6.82% in June 2025), they're still relatively high compared to the near-zero rates we saw just a few years ago. This, combined with rising property taxes and insurance costs, is stretching many Houstonians' budgets thin.

While Houston has historically been more affordable than many other major US cities, the gap is closing. Wages haven't kept pace with the rapid increase in home prices over the past few years. The dream of homeownership is becoming increasingly out of reach for many.

Townhomes and Condominiums: A Different Story

While the single-family home market is showing signs of strength, the townhome and condominium market in Houston is facing a different reality. Sales have been declining for five consecutive months, falling 4.4% year-over-year in June. Both the average and median prices have also decreased.

• Average Price: Down 3.3% to $261,702
• Median Price: Down 4.6% to $230,000

Meanwhile, inventory levels have surged, reaching the highest level since September 2011. This suggests that the townhome/condo market is oversupplied, putting downward pressure on prices.

Several factors could be contributing to this trend:

• Increased preference for single-family homes: Especially among families with children, the desire for more space and a backyard remains strong.
• Concerns about HOA fees and restrictions: Some buyers are hesitant to purchase townhomes or condos due to the additional costs and regulations associated with homeowners' associations.
• Shifting demographics: Changes in population and lifestyle preferences could also be influencing demand for different types of housing.

If you're considering buying or selling a townhome or condo in Houston, it's crucial to be aware of these trends. Buyers may find attractive deals, while sellers may need to adjust their expectations and be prepared to offer incentives.

What's Next for the Houston Housing Market?

• Interest Rates: The direction of interest rates will have a significant impact on affordability and buyer demand. If rates continue to decline, it could provide a boost to the market. However, if they rise again, it could further dampen demand.
• Economic Growth: Houston's economy remains relatively strong, driven by the energy sector and other industries. Continued job growth will support housing demand. However, a slowdown in the economy could have a negative impact.
• Inventory Levels: The high level of inventory will likely continue to put pressure on prices, especially in certain segments of the market.
• Demographic Trends: As Houston's population continues to grow and diversify, housing preferences and demand patterns will evolve.

Houston Housing Market Forecast 2025-2026: What's Coming Up?

Now you're probably wondering about the Houston housing market forecast. The short answer: While prices have cooled down a bit, experts are predicting a slow, steady decline in the near future but definitely not a crash.

Let's dive into the details and see what the data tells us about where things are headed in Houston's real estate world.

Is Houston's Housing Market Slowing Down?

You bet! Right now, the average home value in the Houston-The Woodlands-Sugar Land area is around $313,936. That's about a 1.6% decrease over the past year. And homes are going to pending in an average of 29 days. Source: Zillow

What's the Near-Term Forecast Saying?

Zillow puts out regular forecasts, and here’s what they’re predicting for the Houston area:

Timeframe	Projected Change
June 2025	-0.3%
August 2025	-0.7%
May 2025 to May 2026	-1.8%

Basically, expect a gradual dip in home values over the next year. These dips are still much better than the crash a lot of people were predicting last year.

Houston vs. Other Texas Cities

How does Houston stack up against other major cities in Texas? Let's take a peek (Source: Zillow):

City	Forecasted Change by June 2025	Forecasted Change by August 2025	Forecasted Change from May 2025-May 2026
Dallas	-0.6%	-1.5%	-2.2%
Houston	-0.3%	-0.7%	-1.8%
San Antonio	-0.4%	-1.2%	-3.2%
Austin	-0.8%	-2.4%	-4.2%
McAllen	-0.2%	-0.1%	0.9%
El Paso	0%	0%	0.9%
Killeen	-0.2%	-0.7%	-1%
Corpus Christi	-0.4%	-1.2%	-4.2%
Brownsville	0%	-0.1%	0.5%
Beaumont	-0.4%	-1.6%	-6.2%

Compared to cities like Austin and Dallas, the Houston housing market is holding reasonably steady.

What About the National Outlook?

It's not just about Houston! The overall US housing market plays a role too. Lawrence Yun, the Chief Economist at the National Association of Realtors, thinks things are looking up nationwide. [Source: NAR]

Here's what he's predicting:

• Existing Home Sales: Up 6% in 2025 and 11% in 2026.
• New Home Sales: Up 10% in 2025 and 5% in 2026.
• Median Home Prices: Up 3% in 2025 and 4% in 2026.
• Mortgage Rates: Averaging 6.4% in the second half of 2025 and 6.1% in 2026.

If interest rates come down as predicted, that could really give the market a boost.

So, Will Home Prices Drop in Houston? Will It Crash?

Based on the data, a major crash in Houston seems unlikely. We're more likely to see a slight softening of prices over the next year.

My Personal Take for 2026

If mortgage rates do come down as expected, I believe 2026 will be a more stable year for the Houston housing market. We might even see prices start to tick upwards again as affordability improves and more people jump back into the market. But I feel it will likely depend on whether or not there is enough inventory to meet demand.

Should You Invest in the Houston Real Estate Market?

The city of Houston has long been a beacon for real estate investors seeking opportunities for long-term growth. As one of the largest and most dynamic cities in the United States, Houston offers a unique landscape for those looking to make strategic real estate investments. In this essay, we'll explore the factors that make Houston a promising destination for long-term real estate investment and provide insights into its outlook for sustainable growth.

Economic Resilience

One of the fundamental factors that underpin Houston's real estate investment potential is its economic resilience. Houston is home to a diverse range of industries, including energy, healthcare, manufacturing, and aerospace. Its role as the energy capital of the world has historically been a significant driver of economic activity.

While energy markets can be cyclical, Houston's economy has shown remarkable resilience even in the face of energy price fluctuations. This economic diversity serves as a stabilizing force for real estate investors, reducing the risk associated with economic downturns in any single sector.

Population Growth

Houston has consistently experienced population growth over the years. This demographic expansion is driven by several factors, including a robust job market, affordable housing, and a high quality of life. The city's attractiveness to both domestic and international migrants bodes well for long-term real estate investment. As the population continues to grow, the demand for housing and commercial properties is expected to follow suit, creating a reliable source of rental income and property appreciation for investors.

Infrastructure Development

Houston has made significant investments in infrastructure development. The city's commitment to improving transportation, public amenities, and urban planning has enhanced its livability and attractiveness. Infrastructure investments not only make the city a better place to live but also contribute to increasing property values. As Houston continues to expand and modernize its infrastructure, investors can expect to see a positive impact on their real estate holdings in the long term.

Real Estate Diversity

Houston's real estate market offers a diverse range of investment opportunities. Whether you're interested in residential, commercial, industrial, or mixed-use properties, Houston has options to suit various investment strategies. The city's size and varied neighborhoods provide investors with choices to tailor their portfolios to their specific goals. This diversity allows for risk mitigation through portfolio diversification, a key strategy for long-term real estate investors.

Houston's Top 10 Hotspots for Rising Home Values

Houston's real estate market is a diverse tapestry, offering a range of neighborhoods catering to various lifestyles and budgets. But for those seeking promising investment opportunities, specific areas are projected to see significant home value appreciation. Here's a closer look at the top 10 contenders (Neighborhoodscout).

1. Gulfgate/Riverview/Pine Valley East: This revitalizing pocket on Houston's east side boasts a mix of affordable housing options, proximity to downtown, and ongoing development projects. These factors are fueling a surge in investor interest and property value appreciation.
2. Lawndale/Wayside South: Located southeast of downtown, this area is undergoing a transformation. Historic bungalows are being restored, attracting young professionals and families. This growing demand is likely to push home values upwards.
3. Downtown Southeast: As Houston's urban core continues to expand, the southeastern quadrant near Minute Maid Park is witnessing a development boom. New apartment buildings, office spaces, and revitalized historic structures are drawing residents and businesses alike. This confluence of factors positions the area for significant home value appreciation.
4. Gulfton South: This established neighborhood southwest of downtown offers a multicultural vibe and a variety of housing options, from single-family homes to apartments. The area benefits from easy access to major freeways and proximity to the Medical Center. With its affordability and growing popularity, Gulfton South is poised for steady home value growth.
5. Second Ward East: Steeped in history, Second Ward East is experiencing a renaissance. Art galleries, restaurants, and trendy shops are transforming the neighborhood into a vibrant destination. As the area attracts a new wave of residents, expect home values to rise alongside its growing appeal.
6. Close In: This central district encompasses a diverse range of neighborhoods, each with its own unique character. Its proximity to downtown and eclectic offerings are propelling home value appreciation across the area.
7. Second Ward: Once a predominantly industrial area, Second Ward is undergoing a complete overhaul. New developments, art studios, and a burgeoning nightlife scene are attracting residents, leading to anticipated growth in home values.
8. Greenway/Upper Kirby Area West: This prestigious enclave on the west side of Houston boasts luxury high-rises, single-family homes, and high-end shopping. Its established affluence and desirability are likely to continue driving home values upwards.
9. Second Ward West: Once industrial, this area is transforming with converted lofts, art studios, and a growing young professional scene. Its proximity to downtown and development potential position it for rising home values.
10. South Main: South Main's revitalization is well underway, with historic buildings being restored and repurposed for creative uses. This influx of investment and trendy establishments suggests promising prospects for home value appreciation.

By understanding the unique dynamics of these top neighborhoods, you can make informed decisions about where to invest in Houston's ever-evolving real estate landscape. Remember, consulting with a local real estate expert can provide valuable insights into specific neighborhoods and their potential for future growth.

Conclusion: Houston's Promise for Long-Term Real Estate Investment

When considering the outlook for long-term real estate investment, Houston stands out as a city with immense potential. Its economic resilience, population growth, infrastructure development, and real estate diversity create a fertile ground for investors seeking sustainable and reliable returns. The city's track record of weathering economic challenges and its proactive approach to urban development positions it as an attractive destination for those who value long-term real estate investments. As Houston continues to evolve and expand, it will likely remain a shining star in the constellation of real estate investment opportunities.