The Texas housing market is proving remarkably resilient, bucking the usual autumnal slowdown with a notable surge in home sales in both September and October. Despite rising interest rates, this unexpected upward trend indicates a robust demand and a dynamic market that’s holding strong.

It’s a bit surprising, isn't it? Typically, as the leaves start to turn and the weather gets a little cooler, home sales tend to wind down. But here in Texas, we're seeing something quite different this year. As the Texas Real Estate Research Center at Texas A&M University reported in their October 2024 Texas Housing Insight, home sales have actually increased in both September and October, going against the usual summer peak followed by an autumn dip. I’ve been following the Texas real estate scene for a while now, and this kind of resilience is definitely noteworthy. It tells me that the underlying desire to own a home in Texas is incredibly strong, even when some economic indicators might suggest otherwise.

Texas Housing Market Bucks the Trend With a Surprising Surge in Sales

Sales Take Flight When They Should Be Settling Down

Looking at the numbers, it’s clear that things are heating up, not cooling off. Total home sales saw an impressive 8.8% increase month-over-month, reaching 28,859 units sold in October (based on seasonally adjusted data). This is a welcome trend, especially considering the usual pattern where the last few months of the year see fewer transactions.

It’s not just a statewide phenomenon either. Several of our major metropolitan areas are contributing to this surge:

• San Antonio is leading the pack with a phenomenal 16.8% jump in sales, moving 2,906 homes.
• Houston is right behind, clocking in an 12.1% increase and selling 8,066 homes.
• Austin also saw a healthy 7.0% rise in sales, with 2,488 units changing hands.

The only outlier among the “Big Four” is Dallas-Fort Worth-Arlington, which experienced a slight dip of 1.0% in sales, selling 7,432 homes. While this might seem like a negative, considering the overall upward trend, it’s a relatively small decrease. To me, this suggests that while demand is strong across the state, localized factors or even just statistical fluctuations can cause minor variations.

I remember when buying a home felt like a race against the clock, with inventory scarce. Now, seeing sales rise alongside new listings is a sign of a more balanced, albeit still active, market.

Inventory Grows, Buyers Have More Choices

One of the most significant factors contributing to a healthy housing market is the availability of homes. And the good news continues here! The rate of new listings is still on the rise, meaning buyers are finding more options. This trend has been steady since July, and October saw that momentum carry forward.

• Houston saw new listings increase by an impressive 10.3%.
• San Antonio has been on a near-vertical climb with new listings, showing an 8.6% increase.
• Dallas also experienced a solid 7.3% bump in new listings.
• Austin rounded out the Big Four with a 5.0% rise in new listings.

This increase in new homes hitting the market is directly contributing to rising inventory levels. The state’s total number of active listings went up by 2% in October, reaching 124,663. While Houston and Dallas saw the most significant increases in active listings, Austin experienced a slight dip, and San Antonio remained stable.

What does this mean for buyers? It means that while the market is still competitive, the days of facing a dozen offers within hours of a listing hitting the market might be easing up in some areas. The average time a home spent on the market across Texas, known as days on market (DOM), actually fell to 61 days in October, a two-day drop. Houston saw the biggest drop in DOM, falling from 53 to 50 days, and Austin and San Antonio also saw slight decreases. Dallas, however, was the exception, with DOM increasing slightly from 54 to 56 days. This suggests that while homes are still selling relatively quickly, the pressure cooker environment might be slightly less intense.

However, it's interesting to note that statewide pending listings decreased slightly by 1.7%. This could indicate that while more homes are being listed and sold, the number of agreements to buy homes that are still working their way through the closing process dipped a bit. Dallas and Austin saw increases in pending listings, while Houston saw a slight rise and San Antonio a small dip. This subtle shift might be worth monitoring.

Mortgage Rates Take a Breath, Then Rise

Now, about interest rates. This is always a big conversation starter in real estate. We saw mortgage rates increase in October for the first time since spring 2024. The average 30-year fixed-rate mortgage climbed to 6.43%. This is a notable shift because it happened even as the federal funds rate continued to drop.

• October 2024 Mortgage Rate: 6.43%
• Previous Increase: Spring 2024

For anyone looking to buy, this rise in interest rates can impact affordability. However, it's crucial to remember that rates are still historically low compared to many previous decades. My own experience tells me that buyers who were on the fence might be reevaluating their budgets, but those who are determined to buy will likely adjust their search parameters or down payment strategies rather than abandoning their plans entirely, especially given the strength in sales.

New Home Construction Stays Strong

It's not just existing homes that are seeing activity. The construction sector is also buzzing. Statewide, building permits saw a modest 0.9% increase in October. Most of the major cities experienced an upward trend in permits, with Austin leading the charge at 17.7%, followed by San Antonio at 7.6% and Houston at 1.6%. Dallas was the only major city to see a decrease.

More significantly, seasonally adjusted statewide single-family housing starts surged by a strong 8.7% month-over-month, reaching 14,332 units. San Antonio and Dallas showed particularly impressive growth in housing starts, with San Antonio up 30.3% and Dallas up 25.6%.

The total value of single-family starts in Texas also saw a substantial increase, climbing from $25.4 billion in October 2023 to $32.07 billion in October 2024. Houston accounted for a significant portion of this value, followed by Dallas. This robust activity in new home construction is a very positive sign, indicating confidence in the long-term demand for housing in Texas and providing more options for homebuyers.

Home Prices Hold Steady

After all this talk of rising sales and activity, you might expect home prices to be skyrocketing. However, the data shows that Texas' median home price remained remarkably steady in October, holding at $335,773.

Here's a breakdown of median prices for the Big Four:

While statewide prices were flat, Dallas and Austin saw notable price growth. San Antonio experienced a slight increase, while Houston saw a very minor dip. Even with the slight increase in mortgage rates and the strong sales activity, home prices haven't significantly outpaced incomes, which is a good sign for market stability.

The Texas Repeat Sales Home Price Index, which gives a more precise look at price changes, actually fell 0.3% month-over-month but was still up 1.6% year-over-year. Austin, in particular, saw its annual appreciation dip below the state average. This suggests that while markets like Dallas and Austin might be seeing some price appreciation due to high demand and limited inventory in specific segments, the overall market is well-balanced enough to keep prices from running away.

This resilience in home prices, coupled with increasing sales and inventory, paints a picture of a healthy and mature Texas housing market. It's not a market driven by speculative bubbles, but by genuine demand and a growing population that wants to call Texas home. As a seasoned observer of this market, I find this stability incredibly encouraging. It means that even with the usual economic ebbs and flows, Texas is poised for continued growth in its real estate sector.

Have you felt dizzy watching the Texas real estate market lately? For years, it seemed like prices were going nowhere but up, fueled by massive job growth and people moving here from all over the country. If you’re like me, you’ve been wondering: is the frenzy finally done? And, more importantly, what does the future hold for potential buyers and sellers?

I’ve spent some time reviewing the data and speaking with local experts. Here’s the straight answer: The current Texas housing market trends in 2025 show we are officially in a period of intense correction and transition. While home prices are dipping, home sales are proving resilient.

If you are looking for the overall picture for 2025, brace yourself: we are firmly operating in a buyer's housing market driven by elevated supply, meaning competition is low, but affordability is still tightly tied to fluctuations in mortgage rates. We anticipate this buyer-friendly period will continue through the end of 2025, with prices stabilizing but not significantly rebounding until mid-2026.

Now, let's roll up our sleeves and look at the hard facts defining the current state of Texas real estate.

Current Texas Housing Market Trends

The standard rule in real estate is that prices and sales go up and down together. When demand is high, prices soar, and lots of houses sell. When demand falls, sales slow down, and prices drop. But right now in Texas, we are seeing a fascinating “divergence”—a fancy word for things moving in opposite directions.

The Great Divergence: Sales are Up, Prices are Down

Recent market indicators from the Texas Real Estate Research Center show that while average home prices have continued to decline, sales activity is actually holding strong. For September 2025, the data paints an unexpected picture:

• September Home Sales surged ***7.3% Year-over-Year (YoY)***.
• The Home Price Index dropped 0.8% YoY.
• Active Inventory shot up a staggering 20.2% YoY.

Think about that for a second. We sold way more houses than we did last year, yet prices decreased. Why? Because we have way too many houses sitting on the market. That persistent supply glut is making sellers nervous, and buyers are taking advantage of the leverage they now hold.

This resilience in home sales is being fueled partly by falling mortgage rates (which make monthly payments more manageable) and partly by sellers finally accepting the new reality and lowering their prices. In fact, pending home sales—a strong indicator of future activity—were up 2.8% YoY, suggesting this sales momentum will continue through October and into the fall.

High Inventory is Driving the Transition (The Buyer’s Edge)

The biggest factor tilting the market toward buyers is the sheer volume of available housing. You can’t negotiate hard if the house across the street just sold for $50,000 over asking, but you can if that house has been sitting empty for 90 days.

We measure supply in “Months’ Supply.” A balanced market—one that doesn't favor the buyer or the seller—is typically considered 3 to 4 months of supply in Texas. Guess where we are now?

• As of September 2025, the housing inventory is at a 5.5-month supply. That’s a significant jump from 4.7 months just a year prior.

This excessive supply pressure is forcing sellers to make serious concessions. Look at the numbers on how much sellers are cutting prices:

That median price cut of $17,000 means buyers are negotiating harder, and sellers are accepting it. In percentage terms, sellers are taking roughly 5 percent off the asking price just to close a deal. That’s a massive win for buyers who are ready to move. Also, note that unsold homes are sitting on the market for an average of 96 days—that’s over three months! The quick sales of the pandemic era are truly a distant memory.

Where is the Demand? The Mortgage Rate Lock-In Problem

While overall sales look strong, a closer inspection reveals a major weakness: the middle of the market. This is where the famous “lock-in” effect is wreaking havoc.

Here is the inconvenient truth: Over 80 percent of existing mortgaged homeowners are locked into shockingly low mortgage rates (below 6 percent). If they sell their current home to upgrade—the “move-up” segment—they would have to trade their 4% mortgage for a 6% or 7% mortgage on a new, more expensive house. Financially, it often doesn't make sense.

This reluctance is creating skewed demand:

My take? Until those pesky mortgage rates drop significantly, the middle-tier market, which historically represents the largest share of buyer activity, will remain constrained. Everyone is either looking for the cheapest affordables or they are wealthy enough that rates don’t matter.

Texas Home Prices Fell Again in September

As expected, high supply leads to falling prices. September recorded the third straight month of negative year-over-year price change across the state. The statewide median price was $330,000.

This correction is not hitting every city equally. Some major metropolitan areas that saw huge growth during the pandemic are now correcting the fastest:

The fact that cities like Austin and San Antonio are seeing steeper drops makes sense; they experienced the most rapid price escalation previously. This is the market hitting the reset button.

Texas Housing Market Forecast 2025 and 2026

So, we know the current reality: Inventory is high, sellers are negotiating hard, and sales volume is surprisingly strong. But what happens over the next 12 to 24 months? Will prices keep tumbling?

Will Texas Home Prices Crash? (My Professional Opinion)

This is the question everyone asks me. Based on the data, the simple and firm answer is: No, Texas home prices are highly unlikely to crash.

The reason we won't see a 2008-style collapse is that this is not a crisis of bad borrowing or faulty loans; it is a crisis of affordability caused by high mortgage rates and elevated inventory levels, especially new construction.

When I look at Texas specifically, I see underlying factors that prevent a prolonged downturn:

1. Massive Population Growth: Texas still added more people than any other state last year. Demand for housing isn't gone; it’s just delayed until rates drop.
2. Job Market Strength: Our major metro areas (DFW, Houston, Austin) boast diversified job markets that continue to attract companies and workers.
3. Inventory Normalization: Although inventory is high right now (5.5 months), once rates drop and demand picks up, that inventory will be absorbed quickly, especially since new listings have slowed down (new listings fell 23.4% from their May peak).

My prediction: Instead of a crash, we will see continued price deterioration (small monthly drops) through the remainder of 2025, possibly resulting in an overall average decline of 2% to 4% for the full year 2025. After that, stabilization begins.

Comparing Texas to the National Picture

It’s helpful to see how our situation stacks up against the rest of the country. Lawrence Yun, Chief Economist for the National Association of Realtors (NAR), recently provided an optimistic outlook for the US market nationwide:

The national forecast expects prices to start appreciating again in 2025. However, Texas has to work off its current 5.5 months of supply first. Because our housing inventory is so much higher than the national average, Texas is likely to trail the nation on price appreciation but lead the nation in sales volume recovery. High inventory means sellers have to wait longer for prices to rise again.

2026 and 2027 Projections: The Path to Balance

Based on our current trajectory—high sales volume absorbing excess supply, coupled with the national expectation of lower rates—here is how I see the Texas market evolving:

Remaining 2025 Forecast (Q4 2025)

The pressure cooker stays on. This is still a strong Buyer's Housing Market.

• Prices: Prices will continue to cool, experiencing slow but steady month-over-month declines, especially in areas with very high inventory like Austin and San Antonio. The median seller concession ($17,000+) will remain high.
• Sales: Sales volume will surprise favorably, bolstered by buyers drawn in by lower prices and slightly better-off mortgage rates.
• Inventory: Inventory levels will likely begin to plateau and slowly shrink, setting the stage for 2026.

2026 Forecast (Year-End Projection)

The market hits an equilibrium. The high inventory is mostly absorbed thanks to resilient sales and slowing new construction starts.

• Mortgage Rates: Aligning with the NAR forecast, if rates drop closer to the 6.1% average by the end of 2026, the mid-tier housing segment ($350k-$600k) will finally wake up.
• Prices: Prices will stabilize fully by mid-2026, ending the year with modest appreciation somewhere between 1% and 2%. This is much slower than the NAR projection for the US, reflecting the time needed to digest the current housing supply.
• Market Status: The market will transition towards a Balanced Market (3.5 to 4 months’ supply) in many major metros.

Early 2027 Forecast

Normalization and sustainable growth resume.

• Prices: Appreciation will return to historically normal levels, around 3% to 4%. The Texas Housing Market will feel much calmer and more predictable, having flushed out the excesses of the post-pandemic boom.
• Sales: We will see a slight uptick in existing homeowners selling, as the rate gap between their current mortgage and a new one becomes less painful.

In conclusion, the Texas housing market data shows that the turbulence is far from over in 2025, but the market is moving through this correction in a healthy way. Buyers currently hold the power, but anyone waiting for a massive economic crash will likely be waiting too long. This is the perfect window to buy before rates—the “magic bullet” that Lawrence Yun mentioned—reignite overwhelming buyer demand across the state.