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

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.