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Are Texas Home Sales Dropping in 2025?

June 1, 2025 by Marco Santarelli

Are Texas Home Sales Dropping in 2025?

If you're like me, you've probably been keeping a close eye on the housing market, especially here in Texas. It feels like just yesterday homes were flying off the shelves, with bidding wars becoming the norm. But lately, I've been hearing whispers – are things starting to slow down? Specifically, are Texas home sales dropping in 2025?

Well, based on the latest data, the answer is a definitive yes, at least through the first quarter of the year. Total home sales have indeed declined, and while a recent increase in the number of homes listed for sale might seem like good news, it hasn't been enough to stop this slowdown, particularly in February and March.

Are Texas Home Sales Dropping in 2025?

Why the Chill in the Texas Housing Market?

So, what's behind this shift? From where I stand, it seems to be a combination of factors that are putting the brakes on what was a red-hot market. The most significant, in my opinion, is the stubborn persistence of high mortgage rates. Hovering around the 6.75% to 7% mark, these rates are making it tough for many would-be buyers to afford a home. It’s simple math – higher interest means higher monthly payments, and that can price a lot of people out of the market, especially first-time buyers and those with moderate incomes who rely heavily on financing.

The data backs this up. We’re seeing a surge in new listings, meaning more homes are becoming available. In fact, the rate at which new listings are hitting the market is outpacing even the build-up we saw during the Great Financial Crisis. This rapid growth in inventory, coupled with the slowdown in sales, is a clear indicator that buyer demand is cooling.

The Entry-Level Impact

What’s particularly interesting is that the surge in inventory is being led by entry-level homes. This tells me that those high mortgage rates are disproportionately affecting first-time and moderate-income homebuyers. These are the folks who often have less savings for a down payment and are more sensitive to fluctuations in interest rates. It’s a tough spot to be in – wanting to achieve the dream of homeownership but facing significant affordability hurdles.

Sellers Reacting to the Shift

Now, with more homes on the market and fewer buyers jumping to make offers, sellers are starting to feel the pressure. We’re seeing a record number of price cuts as sellers try to entice buyers. In the first quarter of 2025, the pace of these price reductions accelerated compared to the previous two years, reaching levels we haven’t seen since 2011 – a time when the market was still recovering from widespread foreclosures. This tells me that sellers are recognizing the changing dynamics and are willing to lower their expectations to close a deal.

The Federal Reserve's Role

The Federal Reserve's decision to keep interest rates steady in their recent meetings is another piece of the puzzle. While this eliminates some uncertainty, it also means that mortgage rates are likely to remain elevated for the foreseeable future. This lack of immediate relief from high borrowing costs will likely continue to dampen buyer demand and keep affordability a major challenge.

Looking at the Numbers

Let's drill down into some of the specific figures for March 2025 (Source: Texas Real Estate Research Center):

  • Total Home Sales: Down 1.8% year-over-year.
  • Median Home Price: Up 1.0% year-over-year to $340,000. While still an increase, the pace of appreciation has clearly slowed.
  • Active Listings: Soared by 29.7% year-over-year, indicating a significant increase in available homes.
  • New Construction: Decreased by 6.8% year-over-year. This could suggest builders are reacting to the cooling demand.

When we compare Texas to the national picture, in March 2025:

Metric Texas U.S.
Monthly Closed Sales 28,190 315,000
YoY Sales Change -1.8% -3.1%
YTD Sales Change -1.7% -2.2%
Median Sale Price $340,000 $403,700

As you can see, while Texas is experiencing a dip in sales, the national trend is similar, though slightly more pronounced.

Inventory Growth: A Deeper Dive

The growth in active listings is truly remarkable. At the end of March 2025, there were 132,140 active listings statewide, a nearly 30% jump from the previous year. And as I mentioned, entry-level homes are leading this surge.

Price Range Year-over-Year Inventory Growth (March 2025)
Below $300,000 33%
$300,000 – $500,000 30%
$500,000 – $750,000 27%
Above $750,000 25%

This clearly shows that the impact of affordability is most acutely felt at the lower end of the market.

Price Reductions: More Common Than Ever

The fact that nearly 65% of home sales in March saw price reductions of at least $5,000 is a significant data point. This is higher than what we saw in both 2024 and 2023, and even surpasses the levels during the early recovery period after the last housing downturn. The median price reduction in March was $12,500, representing about 3.6% of the original listing price. This gives buyers more negotiating power than they've had in quite some time.

Regional Differences within Texas

It’s important to remember that the Texas housing market isn’t one monolithic entity. Different metropolitan areas are experiencing different trends. For instance, Houston continues to see steady, albeit gradual, home price appreciation. On the other hand, Dallas has seen some weakening in home prices, likely due to the significant increase in inventory there. Austin is even experiencing a slight year-over-year price decline. Areas like Laredo and College Station are bucking the statewide trend and showing strong year-over-year sales growth, while others like Victoria and Eagle Pass are seeing more significant declines.

New Construction Trends

The decrease in new construction permits statewide suggests that builders are taking note of the cooling demand. However, there are regional variations here as well. While major markets like Houston, Dallas, and Austin have seen declines in permit activity, some smaller areas like Abilene, San Angelo, and Waco are experiencing significant increases. This could indicate a shift in where new development is taking place.

My Takeaway

Based on the data and my understanding of the market, it's clear that Texas home sales are indeed dropping in 2025. The primary drivers appear to be high mortgage rates impacting affordability and leading to a cooling of buyer demand. The surge in inventory is giving buyers more choices and more negotiating power, resulting in a higher number of price reductions. While median home prices are still up slightly year-over-year statewide, the rate of appreciation has slowed considerably, and some major metropolitan areas are even seeing price declines.

While it's not the dramatic downturn some might fear, it's definitely a significant shift from the hyper-competitive market we've seen in recent years. For buyers, this could present opportunities to find more options and potentially negotiate better deals. For sellers, it means adjusting expectations and being more strategic with pricing.

It remains to be seen how the rest of 2025 will unfold. The Federal Reserve's future decisions on interest rates will undoubtedly play a crucial role. However, as it stands, the Texas housing market in 2025 is characterized by slowing sales, rising inventory, and increased price sensitivity. It's a market that demands careful navigation for both buyers and sellers.

Texas Real Estate May Be Slowing—But Opportunity Isn't

Yes, Texas home sales may be cooling, but that means more negotiating power and better deals for investors like you.

Norada connects you to stable, cash-flowing properties in emerging Texas markets before the next wave of buyer activity returns.

HOT NEW LISTINGS JUST ADDED!

Talk to a Norada investment counselor today (No Obligation):

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Recommended Read:

  • Worst Places to Live in Texas: Avoid These Towns
  • Will the Texas Housing Market Crash?
  • Texas Housing Market: Prices, Trends, Predictions
  • 10 Cheapest Places to Live in Texas

Filed Under: Housing Market Tagged With: Housing Market, Texas home sales, Texas housing market

Texas Housing Market: Prices, Trends, Forecast 2025

February 6, 2025 by Marco Santarelli

Texas Housing Market

If you're wondering what's happening with the current Texas housing market trends, here's the quick answer: The market is seeing increased sales and new listings, mortgage rates are on the rise after a period of stability, and home prices are holding steady. In short, the market is dynamic and requires a closer look to fully understand. Let's dive into the details.

Current Texas Housing Market Trends: What You Need to Know

I've been keeping a close eye on the real estate market here in Texas, and things are definitely interesting. It's not the frenzy we saw a couple of years ago, but it's not a slump either. As someone who's passionate about real estate and wants to help people make informed decisions, I'm going to break down the key trends shaping the Texas housing market right now.

Home Sales

One thing that's caught my attention is the uptick in home sales. Usually, things cool off in the fall, but according to the Texas Real Estate Research Center, October 2024 saw an 8.8% increase in total home sales compared to September. That's a pretty significant jump.

  • Overall Increase: October saw 28,859 homes sold, an 8.8% increase month-over-month (MOM).
  • San Antonio Leads the Way: San Antonio experienced the highest sales increase, nearly 17% (2,906 homes).
  • Houston Follows: Houston saw a solid 12% increase, with 8,066 homes sold.
  • Austin Gains: Austin experienced a 7% increase, with 2,488 homes sold.
  • Dallas Declines: Dallas was the only one of the “Big Four” to see a decrease, with sales down by 1% (7,432 homes).

It's a mixed bag, but the overall trend is positive. I think this shows that there's still demand out there, even with higher interest rates.

Home Prices

Home prices in Texas have remained relatively steady overall. While we're not seeing the rapid appreciation of the past, prices aren't plummeting either. This provides more stability for buyers and sellers.

  • Statewide Stability: The median home price in Texas held steady in October at $335,000.
  • Dallas Sees Increase: Dallas experienced the largest increase, up 3% from $393,340 to $404,995.
  • Austin Also Rises: Austin followed with a 1.8% increase, from $430,304 to $437,835.
  • San Antonio Slightly Up: San Antonio rose slightly, by 0.3%, now at $306,624.
  • Houston Dips Slightly: Houston saw a minor decrease of 0.1%, now at $337,852.
City September Median Price October Median Price MOM Change
Dallas-Fort Worth-Arlington $393,340 $404,995 3%
Austin-Round Rock-San Marcos $430,304 $437,835 1.8%
San Antonio-New Braunfels, TX $305,624 $306,624 0.3%
Houston-Pasadena-The Woodlands $338,191 $337,852 -0.1%

Are Home Prices Dropping?

While the median price remains relatively stable in Texas, a deeper dive reveals a nuanced picture. The Texas Repeat Sales Home Price Index, which is a more reliable indicator of price changes, fell 0.3% MOM in October but is still up 1.6% year-over-year (YOY). Austin is an exception, with annual appreciation below the state average and a decrease of 1.5% YOY in October. This suggests that while overall prices aren't drastically falling, some areas are experiencing slight downward pressure.

Housing Supply

The good news for buyers is that housing inventory is on the rise. This means more choices and less competition.

  • Active Listings Increase: The number of active listings statewide increased by 2% from 122,192 to 124,663.
  • Houston Leads: Houston experienced the largest increase with 30,345 listings (up 2.4%).
  • Dallas Follows: Dallas is close behind, with 28,704 listings (up 1.8%).
  • Austin Slightly Down: Austin saw a slight decrease to 28,704 listings (down 0.6%).
  • San Antonio Steady: San Antonio remained relatively stable with around 14,000 listings.

New listings also continued to increase in October 2024. Among the Big Four, Houston and San Antonio experienced MOM increases of 10.3 percent (14,627) and 8.6 percent (4,447), respectively. Dallas and Austin grew by 7.3 percent (12,063) and 5 percent (3,774), respectively.

This increase in housing supply could lead to prices stabilizing further, or even decreasing slightly in some areas.

Is It a Buyer's or Seller's Housing Market?

It's becoming more of a balanced market than we've seen in recent years, but it still is leaning slightly toward sellers. There are more homes to choose from than before, giving buyers more leverage, but demand is still strong enough to keep prices from falling dramatically in most areas.

The state’s average days on market (DOM) fell to 61 days in October, a two-day drop. Houston had the largest decrease—from 53 to 50 days, a 4.3 percent decrease. This means properties are getting sold quicker, but there are exceptions to this. Dallas was the only Big Four city to see an increase in DOM—from 54 to 56 days, a 4 percent increase.

Market Trends

Here's a summary of the main market trends I'm seeing:

  • Increased Sales: Home sales are up, defying the typical seasonal slowdown.
  • Rising Inventory: More homes are coming on the market, giving buyers more options.
  • Steady Prices: Home prices are holding relatively steady, but with slight variations across different cities.
  • Interest Rate Fluctuations: Mortgage rates have started to climb again after a period of decline.
  • New Construction: The number of new-home starts is increasing, adding to the housing supply.

Impact of High Mortgage Rates (Hovering Around 7% as of January 2025)

Let's talk about those interest rates. They've been a major factor in shaping the Texas housing market. With mortgage rates hovering around 7%, affordability is definitely a concern for many potential buyers.

The average ten-year U.S. Treasury Bond yield rose by 38 basis points, reaching 4.1 percent in October. The Federal Home Loan Mortgage Corporation’s 30-year fixed-rate rose by 25 basis points to 6.43 percent. October was the first month of increase for both rates since spring 2024.

This can slow down demand as monthly payments become more expensive. It also means that buyers need to be even more strategic in their approach.

However, the market is proving resilient. Even with higher rates, people are still buying homes. This could be due to a number of factors, including:

  • Strong Economy: Texas continues to have a strong economy, which is supporting the housing market.
  • Population Growth: People are still moving to Texas, creating demand for housing.
  • Changing Priorities: For many people, owning a home is still a top priority, even if it means paying a higher interest rate.

Texas Housing Market Predictions 2025-2026

Is the Texas housing market cooling down? Are home prices going to drop? If you're asking these questions, you're not alone. Many people are wondering what the future holds for real estate in Texas. The good news is, based on recent forecasts, a widespread crash is unlikely, and while some areas might see price dips, others are still projected to grow. The overall picture is nuanced and depends heavily on the specific region you're looking at. So, let's dive in and explore what the experts are predicting for the Texas housing market!

Understanding the Forecast Data

Before we look at specific numbers, it’s important to understand where the data comes from. I've looked at forecasts from Zillow, a reliable source for real estate data. Their predictions focus on the percentage change in home values for various Metropolitan Statistical Areas (MSAs) in Texas. It's not about the absolute value of homes, but rather how much prices are expected to rise or fall over a period.

Here's a breakdown of the data:

Texas Metro Area Price Change Dec 2024 Price Change Feb 2025 Price Change Nov 2025
Dallas, TX -0.2% -0.5% 1%
Houston, TX -0.1% -0.1% 0.6%
San Antonio, TX -0.2% -0.2% 0.3%
Austin, TX -0.5% -1.4% -0.4%
McAllen, TX 0.1% 0.8% 4.2%
El Paso, TX 0.1% 0.6% 3.7%
Killeen, TX -0.3% -0.4% 1.7%
Corpus Christi, TX -0.1% -0.2% -1.1%
Brownsville, TX 0.2% 0.8% 4.3%
Beaumont, TX 0.3% 0.3% -2.4%
Lubbock, TX -0.3% -0.5% 0.1%
Longview, TX 0.5% 1.1% 1%
Waco, TX -0.1% 0% 2.4%
Amarillo, TX 0.1% 0.3% 1.7%
Laredo, TX 0.2% -0.1% -0.9%
College Station, TX 0% 0% 0.4%
Tyler, TX 0.2% 0.9% 3.1%
Abilene, TX 0% 0.6% 1%
Midland, TX 0.4% 0.4% -2.2%
Odessa, TX 0.3% 0.1% -2.7%
Wichita Falls, TX 0.4% 1.3% 3.6%
Texarkana, TX -0.1% -0.3% -0.9%
Sherman, TX 0% 0.5% 2.6%
San Angelo, TX 0.4% 0.5% 0.9%
Victoria, TX 0.1% 0.3% 0.3%
Lufkin, TX -0.2% 0.1% 0.5%
Athens, TX -0.3% -0.3% 1.3%
Huntsville, TX -0.1% 0% 0%
Rio Grande City, TX -0.9% -1.1% -3.8%
Nacogdoches, TX 0.4% 0.7% 0.8%
Palestine, TX 0.3% 1.1% 3.3%
Eagle Pass, TX 0.9% 1.9% 3%
Kerrville, TX -0.3% -0.3% 0.6%
Corsicana, TX 0.3% 1.2% 4%
Jacksonville, TX 0.1% 0.9% 4.1%
Paris, TX 0% 0.1% 1.5%
Alice, TX -0.4% -1.3% -6.6%
Del Rio, TX 0.3% 0.8% 1.3%
Mount Pleasant, TX -0.3% 0% 1.4%
Stephenville, TX 0.4% 1.3% 4.6%
El Campo, TX 0% -0.4% -1.8%
Gainesville, TX 0.5% 1.2% 2.8%
Brownwood, TX 0% 0.3% 0.9%
Sulphur Springs, TX -0.3% -0.3% 0.2%
Bay City, TX 0.3% 0.5% -0.4%
Brenham, TX -0.2% -0.1% 0.6%
Big Spring, TX -2.5% -4.9% -10.1%
Plainview, TX -0.8% -1.3% -3%
Beeville, TX 0% -0.3% -4.7%
Kingsville, TX -0.1% -0.2% -1.6%
Mineral Wells, TX 0.1% 0.5% 2.4%
Fredericksburg, TX -0.3% -0.4% 1%
Uvalde, TX 0.2% 0.7% -0.5%
Pampa, TX -0.7% -0.8% -2.4%
Levelland, TX -0.3% -0.3% -2.5%
Dumas, TX 0.5% 1% -0.7%
Borger, TX -0.1% 0.2% -1.9%
Raymondville, TX -0.8% -2% -7.5%
Port Lavaca, TX -0.3% -0.6% -1.1%
Hereford, TX 0.4% 1.1% 3.2%
Andrews, TX 0.2% 0.1% -2%
Snyder, TX 0.2% 0.5% -2.1%
Sweetwater, TX -1.4% -3.3% -7.8%
Pecos, TX -1.3% -3.3% -9.9%
Zapata, TX -0.4% -1.6% -6.5%
Vernon, TX -1.3% -2.6% -5%
Lamesa, TX -0.3% -1.2% -5.5%

What This Forecast Tells Us?

Let's break down what these numbers mean for you as a potential buyer or seller:

  • Short-Term Cooling: Many major Texas metros, including Dallas, Houston, San Antonio, and Austin, are expected to see slight dips in home prices by the end of 2024. This cooling is predicted to continue into early 2025, with Austin experiencing the most significant drop (-1.4%) in February. This suggests a potential window for buyers to negotiate a better deal.
  • Not a Crash: These are small percentage decreases and definitely not a crash. We are seeing a correction in the market and it is not a sign of a drastic drop. It is just a cooling off.
  • Varied Regional Outlook: While some areas see price declines, others show positive growth. Areas like McAllen, El Paso, and Brownsville are predicted to see strong growth through November 2025. These areas might be attractive for investors looking for appreciation.
  • Long-Term Growth: By November 2025, most areas are projected to see some growth, even if it’s small. This indicates a potential for the Texas housing market to stabilize and slowly appreciate.
  • Smaller Towns, Big Moves: The forecast also shows interesting trends in smaller cities. Stephenville and Corsicana show some significant growth towards the end of 2025. This points to a shift in market dynamics beyond the major urban hubs.
  • Cautionary Areas: Some areas, particularly in West Texas, such as Big Spring, Pecos, and Sweetwater, are forecast to see significant price declines. I would personally recommend doing more research if you're looking at these areas to buy or sell.

My Thoughts on the Texas Housing Forecast

Based on these projections, I believe that we're seeing a necessary adjustment in the Texas housing market. The rapid price increases of recent years were not sustainable, and the current slowdown is a sign of a more balanced market.

Here are some personal observations:

  • Interest Rates: Mortgage interest rates play a huge role in these trends. If rates remain high, this could continue to put downward pressure on prices. However, if rates begin to drop, we might see some upward push on pricing as well.
  • Migration: Texas continues to attract people from other states due to its economy and relatively lower cost of living (when compared to places like California). This migration could create demand which could support prices in the long run.
  • Local Economies: Each city has its own unique economic drivers. Areas with strong employment sectors are likely to fare better than those that do not. I strongly advise anyone interested in buying or selling in Texas to research their specific city and neighborhood.

What about 2026?

While the data here stops at November 2025, I think it's highly likely that the overall trends we're seeing now will continue into 2026:

  • Continued Gradual Growth: I don’t expect a massive price boom, but I also do not think we'll see a large drop either. I believe that the Texas market should continue to experience gradual growth in most areas.
  • More Nuance: The market will be more diverse, with some areas performing exceptionally well, some stabilizing, and a few continuing to struggle. So there will be no “one size fits all” scenario.
  • Importance of Local Data: It will be more crucial than ever for buyers and sellers to look at specific local data and not just rely on the broad state trends.

The Takeaway

The Texas housing market is not about to crash, but it is changing. There are opportunities for both buyers and sellers, but you need to be informed and strategic. If you're thinking about making a move, consider:

  • Doing your homework: Look at data for your specific area, and research local market conditions.
  • Talking to an expert: A real estate agent in your area is the best source of local knowledge.
  • Thinking long-term: Real estate is generally a long-term investment. Don't make decisions based solely on short-term fluctuations.

The Texas housing market has always been dynamic, and it's crucial to stay informed about the latest trends and forecasts. By keeping an eye on data and understanding local conditions, you can make wise decisions.

Best Places to Buy a House in Texas in 2025

These are some of the best areas to buy a home in Texas based on home valuations, property taxes, homeownership rates, housing prices, and real estate trends (Niche.com). The ranking is based on statistics from the United States Census Bureau, the FBI, and other sources. Cottonwood Creek South is the best place in Texas to buy a house.

1. Cottonwood Creek South, Richardson, TX: This Richardson neighborhood offers a suburban lifestyle close to the buzz of the Dallas-Fort Worth metroplex's tech industry.

2. Arapaho, Richardson, TX: Similar to Cottonwood Creek South, Arapaho is another neighborhood in Richardson offering a quieter suburban experience with access to the city's amenities.

3. Lakeside City, TX: Just south of Richardson, Lakeside City is a family-friendly town known for its good schools.

4. Fulshear, TX: This Fort Bend County town provides a mix of rural and suburban living with easy access to Houston. Fulshear is ideal if you want a quieter area while staying close to the city.

5. Canyon Creek South, Richardson, TX: Yet another Richardson neighborhood on the list, Canyon Creek South offers a suburban setting near the opportunities of the Dallas-Fort Worth metroplex.

6. Heights Park, Richardson, TX: Rounding out the Richardson trio, Heights Park provides a suburban atmosphere with access to the amenities of a big city.

7. Shady Hollow, TX: As a suburb of Austin, Shady Hollow blends small-town charm with the excitement of the state capital. It's a popular choice for families and young professionals.

8. Red Lick, TX: Located in Bowie County, Red Lick is a more rural area with a small-town feel. This is a good option for those seeking an affordable place to live with plenty of space.

9. Woodway, TX: Situated near Waco, Woodway is a growing suburb known for its peaceful atmosphere and scenic Hill Country views.

10. Timberbrook, Plano, TX: This Plano neighborhood offers a suburban lifestyle with easy access to the amenities of both Plano and Dallas. Plano is another major city in the Dallas-Fort Worth area, known for its strong economy and good schools.

Texas Cities with Highest Home Price Appreciation

Texas boasts a diverse landscape, and these 10 cities reflect that variety. These are the top ten cities in Texas that have had the highest real estate appreciation since 2000 (Neighborhoodscout).

  1. Westworth Village: This could be a smaller town or an affluent suburb that has seen significant growth in property values since 2000.
  2. Gustine: Perhaps a rural town or a smaller city, Gustine's popularity surge has likely driven up housing prices.
  3. Balmorhea: Its unique location near a natural spring or recreational area might be the reason behind Balmorhea's increased real estate interest.
  4. Garden City: This could be a growing city or one that's been revitalized, attracting new residents and boosting property values.
  5. Mico: Potentially a smaller community or a hidden gem, Mico might have experienced a surge in interest due to affordability or a specific lifestyle factor.
  6. Runge: This rural town could be experiencing growth due to its proximity to a larger city or changing economic factors.
  7. Granger: Similar to Runge, Granger might be a growing rural community benefiting from its location or new development.
  8. Encinal: Potentially a historic town or one with natural beauty, Encinal's real estate market might have boomed due to its unique appeal.
  9. Falls City: This could be a smaller city undergoing revitalization or attracting new residents for specific reasons, leading to rising property values.
  10. Wingate: Potentially a rural town or a lakeside community, Wingate might have seen a rise in real estate interest due to its location or changing lifestyle preferences.

Work with Norada in 2025, Your Trusted Source for

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Filed Under: Growth Markets, Housing Market Tagged With: Texas housing market, Texas real estate

Will the Texas Housing Market Crash in 2025?

October 28, 2024 by Marco Santarelli

Will the Texas Housing Market Crash in 2025?

Is the Texas housing market headed for a crash in 2025? Everyone's talking about it. Lately, things seem to be slowing down. Home sales aren't as hot as they used to be, prices are dropping a bit, and there are more houses for sale. Plus, it's getting more expensive to borrow money for a house because interest rates are up. This has a lot of people worried – buyers and investors alike.

But before we start panicking about a huge market crash, we need to look closer. It's not that simple. We need to understand what's really going on with Texas' economy.

Will the Texas Housing Market Crash in 2025?

The Texas housing market has long been among the nation's most dynamic, benefiting from strong population growth, robust job creation, and high housing demand. Recent trends, however, suggest a market that's shifting gears as new economic pressures and regional events play a role in its evolution.

Following Hurricane Beryl, August housing data reveals a market balancing corrections with growth, particularly in new listings and construction activity.August's seasonally adjusted data shows a 6.2% month-over-month decrease in home sales, suggesting a continued cooldown after a sharp recovery in July.

While this dip might initially appear concerning, it reflects an expected return to more normalized activity levels compared to the intense pace observed last year. Notably, this decline is offset by a 13.8% increase in new listings, driven primarily by the Houston metro area rebounding with a substantial 44.9% jump in active listings following the impact of the storm.

Interestingly, median home prices saw only a slight drop of 0.2% month-over-month, bringing the average Texas home price to $335,494 as of August. This stabilization in prices, despite fewer transactions, indicates underlying demand remains firm. Additionally, with mortgage rates dropping and new building permits growing by 1.59% month-over-month, the market seems poised for a period of recalibration rather than decline.

As we approach 2025 in a few months, these trends suggest that while the Texas housing market may be moderating, it remains resilient. Shifts in inventory, modest pricing adjustments, and growing construction activity point to a sustainable path forward for one of the country's most resilient real estate markets.

Texas Housing Market Insights

📉
Sales Dip, New Listings Bounce Back: Texas saw a 6.2% month-over-month decrease in seasonally adjusted home sales, totaling 24,948 homes sold in August 2024. Among the major metros, Dallas had the steepest decline at 10.4%, while Austin experienced a 2.7% increase in home sales.

🏠
Increase in New Listings: New listings rose 13.8% in August, largely due to recovery efforts after Hurricane Beryl. Houston led the increase with a 44.9% rise in new listings, followed by Austin with 27%.

⏳
Days on Market Increase: The average Days on Market (DOM) in Texas rose to 61 days, with Dallas experiencing a 7% increase to 55 days. Austin’s DOM also increased slightly, now at 70 days.

💸
Interest Rates Decline: Treasury and mortgage rates both declined in August, with the 10-year U.S. Treasury Bond yield falling by 38 basis points to 3.87% and the 30-year fixed-rate mortgage down to 6.5%.

🏷️
Home Price Dip: Texas’ median home price decreased slightly by 0.2% month-over-month to $335,494 in August 2024, with the largest price drop in Austin, down 2.8% to $435,915.

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Increase in Building Permits: Building permits rose 1.59% month-over-month in August. Houston saw the largest increase at 7.3%, indicating growth in new single-family construction starts.

 

Texas Economic Outlook: A Key Determinant

To understand the future of the Texas housing market, we must consider the state's economic health. Here's the current picture:

  • Strong Economic Growth: Texas continues to outperform the nation in economic growth. The state's GDP grew at 2.5% in the first quarter of 2024, outpacing national figures.
  • Robust Job Market: Texas boasts a strong job market with steady job growth and an unemployment rate that remains below the national average. Over the past 12 months, Texas added 265,500 net payroll jobs and the unemployment rate rose by 0.2 percentage points from 3.9 percent. Nationally, nonfarm payrolls rose by 114,000 in July, or 0.1 percent. Texas ranks 16th in the nation for percentage gain in nonfarm payroll employment over the past 12 months.

These factors contribute to a positive economic outlook, which ultimately underpins the stability of the housing market.

Factors Influencing the Texas Housing Market

Several factors are currently shaping the Texas housing market, making it difficult to predict its trajectory with absolute certainty.

Factors Suggesting a Possible Slowdown or Correction:

  • Rising Interest Rates: The Federal Reserve's efforts to combat inflation have led to increased interest rates, making mortgages more expensive and potentially deterring some buyers.
  • Affordability Concerns: The combination of rising home prices and increased interest rates has exacerbated affordability issues, particularly for first-time homebuyers.
  • Increased Inventory: The rise in active listings suggests that inventory might be loosening, giving buyers more choices and potentially easing price pressures.

Factors Supporting Continued Growth (Although at a Slower Pace):

  • Strong Economic Fundamentals: Texas' thriving economy, fueled by job growth and population influx, continues to support housing demand.
  • High Demand: Texas remains a desirable location for businesses and individuals, ensuring a steady influx of potential homebuyers.
  • Limited Supply: Despite the recent increase in inventory, Texas still faces a housing shortage, particularly in major metropolitan areas, which could prevent a sharp price decline.

Will the Texas Real Estate Prices Drop in 2025?

The Texas housing market is clearly cooling from its recent highs, but current data does not indicate an impending crash. A combination of factors, including a strong economy, sustained population growth, and the market’s demonstrated resilience, suggests that a major crash remains unlikely.

A more realistic scenario is a gradual slowdown or correction, marked by the following trends:

  • Moderating Price Growth: Price appreciation is expected to slow further. August data showed a slight 0.2% month-over-month decline in median home prices, a trend that could continue into 2025.
  • Longer Time on Market: As of August, the average days on market (DOM) increased to 61 days, signaling that homes may take longer to sell as buyers become more selective and the market adjusts.
  • Shift in Negotiation Power: With the rise in new listings, especially after Hurricane Beryl boosted inventory, negotiation power may gradually shift toward buyers, offering them more leverage.

Advice for Buyers and Sellers

Buyers: This could be a favorable time to enter the market. Take the time to conduct thorough research, assess your financial position carefully, and approach deals with room for negotiation.

Sellers: Realistic pricing will be crucial as the market shifts. Emphasize the unique features of your property and be prepared for potential negotiations with buyers who have increased options.

In summary, the Texas housing market is undergoing a period of adjustment, but the fundamentals remain strong. While predicting the future with absolute certainty is impossible, a balanced perspective suggests that a crash is unlikely. Instead, we can anticipate a period of more moderate growth and a shift towards a more balanced market.

If you're looking to buy a home, careful research on specific areas, along with a realistic assessment of your budget considering interest rates, is key. On the other hand, if you're selling, understanding local trends and pricing strategies will be crucial for success.

Recommended Read:

  • Worst Places to Live in Texas in 2024: Avoid These Texas Towns
  • Is Texas the Next Big Thing? 10 Reasons Texas is the Future
  • Texas Housing Market 2024: Trends and Predictions
  • Texas Housing Market Cools Down: Boon for First-Time Buyers?

Filed Under: Growth Markets, Housing Market Tagged With: Texas housing market, Will the Texas Housing Market Crash

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