Currently, the Texas housing market exhibits characteristics of both a buyer's and seller's market. While the surge in home sales and stable days on the market favor sellers, the rise in new listings and months of inventory provide opportunities for buyers. Despite challenges, the housing market in Texas continues to thrive, driven by strong demand and a robust construction sector.
Texas Housing Market Trends in 2024
This report from the Texas Real Estate Research Center at Texas A&M University delves into key aspects of the Texas housing market, including home sales, construction permits, pricing trends, and the impact of rising mortgage rates.
How is the Housing Market Doing Currently?
The Texas housing market, much like a phoenix rising from the ashes, rebounded from the previous month's downturn, displaying resilience in the face of challenges. Despite mortgage rates lingering at elevated levels, the market witnessed a remarkable surge in home sales, showcasing an upward trajectory.
According to recent data, Texas experienced a 14.6 percent increase in total home sales month over month, with a staggering 29,209 homes sold. This surge in sales is particularly noteworthy as it spans across all major cities in Texas, marking a significant improvement compared to the fourth quarter of 2023.
Home Sales in Texas Skyrocket
The surge in home sales is a testament to the robustness of the Texas housing market. Major cities like Houston witnessed an impressive 37.3 percent increase in housing sales, with over 2,000 additional sales compared to December. The rest of the Big Four cities also experienced substantial gains, with sales soaring by over 10 percent. Despite this surge in demand, the average days on the market remained relatively stable, indicating a healthy balance between supply and demand.
Active listings across the state saw a slight increase, with San Antonio leading the pack with a 2.4 percent monthly rise. However, Austin witnessed a significant drop in active listings, highlighting potential supply constraints in certain areas. The rise in new listings, coupled with an increase in months of inventory, suggests a dynamic market environment where buyers and sellers are actively engaged.
Mortgage Rates Remain Below Peak Values
Despite the surge in home sales, mortgage rates continue to remain below their elevated levels seen in 2023. While the ten-year U.S. Treasury Bond yield rose slightly, the Federal Home Loan Mortgage Corporation's 30-year fixed-rate saw a notable increase. This delicate balance between mortgage rates and home sales underscores the resilience of the Texas housing market.
Permits Rise, Starts Unchanged
The construction sector also witnessed notable activity, with single-family construction permits experiencing a modest increase month over month. However, construction starts remained largely unchanged, reflecting a cautious approach among developers. Despite this, the total single-family starts value climbed, signaling underlying strength in the construction sector.
How Competitive is the Texas Housing Market?
The Texas housing market is undeniably competitive, with buyers vying for limited inventory across major cities. The surge in home sales, coupled with stable days on the market, indicates heightened competition among buyers. Additionally, the rise in new listings suggests that sellers are also actively participating in this competitive landscape, making it a dynamic environment for both parties.
Are There Enough Homes for Sale to Meet Buyer Demand?
While the surge in new listings is a positive sign, there are indications of supply constraints in certain areas, particularly in Austin. The drop in active listings in Austin underscores the challenges faced by buyers in finding suitable properties. However, the rise in months of inventory suggests that the market is in a state of flux, with opportunities for both buyers and sellers.
What is the Future Texas Housing Market Outlook?
The future outlook for the Texas housing market remains optimistic, albeit with some challenges on the horizon. The surge in home sales, coupled with a resilient construction sector, bodes well for continued growth in the market. However, potential supply constraints and fluctuating mortgage rates could pose challenges in the coming months.
Texas Housing Market Predictions for 2024 and 2025
The following data provides insights into the forecast for the Texas housing market. According to Zillow, the average home value in Texas stands at $298,624, showing a slight 0.1% decrease over the past year. Homes in Texas typically go from listed to pending in approximately 38 days.
For Sale Inventory and New Listings
The market's inventory is a critical indicator of supply and demand dynamics. As of February 29, 2024, Texas boasts 102,753 properties for sale. Additionally, there were 23,914 new listings reported during the same period, signifying ongoing activity within the market.
Median Sale Price and List Price
The median sale price and median list price offer insights into pricing trends and seller expectations. As of January 31, 2024, the median sale price in Texas stood at $314,400, while the median list price was $349,667. This indicates a gap between listed and actual sale prices, reflecting negotiation dynamics and market sentiment.
Sale to List Ratio
The sale to list ratio is a measure of how close homes are selling to their listing prices. In Texas, the median sale to list ratio was 0.981 as of January 31, 2024, suggesting that homes typically sell slightly below their listed prices.
Percentage of Sales over and under List Price
Examining the percentage of sales over and under the list price provides insights into pricing competitiveness and negotiation dynamics. As of January 31, 2024, 15.7% of sales in Texas were over the list price, while 64.4% were under the list price, indicating varying levels of buyer-seller negotiation across transactions.
Are Home Prices Dropping in the state of Texas?
While certain fluctuations may occur in localized markets, overall, home prices in Texas have shown resilience and stability. While there may be occasional dips or plateaus, there is no widespread trend indicating significant or sustained drops in home prices across the state.
The above data for February shows that the Texas remains predominantly a seller's housing market. Low inventory levels and high demand contribute to increased competition among buyers, often resulting in bidding wars and homes selling above asking prices. Sellers generally have the upper hand in negotiations, with limited options for buyers.
Is Now a Good Time to Buy a House in Texas?
For prospective buyers, the decision to purchase a house depends on individual circumstances and long-term goals. While market conditions may favor sellers, historically low mortgage rates and a relatively stable housing market still present opportunities for buyers. It's essential to consider factors such as financial readiness, personal preferences, and long-term investment objectives when determining if now is the right time to buy a house in Texas.
Top Areas in Texas Poised for Largest Home Price Growth
Based on recent statistics, several regions stand out as potential hotspots for appreciation in property values in 2024 and 2025.
Brownsville, TX
- Growth Projection: Brownsville is projected to experience steady growth in home prices, with an anticipated increase of 1.2% by March 31, 2024, followed by 2.4% by May 31, 2024, and 3.4% by February 28, 2025. This trajectory suggests a promising outlook for homeowners and investors in the area.
Stephenville, TX
- Growth Projection: Similarly, Stephenville is forecasted to see incremental growth in home prices, with an expected rise of 0.8% by March 31, 2024, followed by 1.8% by May 31, 2024, and 3.4% by February 28, 2025. This upward trend indicates positive momentum in the local real estate market.
McAllen, TX
- Growth Projection: McAllen is poised for moderate growth in home prices, with an estimated increase of 0.4% by March 31, 2024, followed by 1% by May 31, 2024, and 3.3% by February 28, 2025. These projections highlight the region's resilience and attractiveness to potential buyers and investors.
Jacksonville, TX
- Growth Projection: While Jacksonville's growth may be more modest compared to other areas, it still presents opportunities for appreciation in home prices. Projections indicate a potential increase of 0.8% by May 31, 2024, and 2.6% by February 28, 2025, showcasing the town's stability and appeal to prospective homeowners.
Corsicana, TX
- Growth Projection: Corsicana is expected to see gradual growth in home prices, with a projected rise of 0.7% by March 31, 2024, followed by 1.4% by May 31, 2024, and 2.2% by February 28, 2025. These forecasts underscore the town's potential for investment and development in the real estate sector.
El Paso, TX
- Growth Projection: El Paso rounds out the list with promising projections for home price appreciation. Anticipated growth stands at 0.6% by March 31, 2024, 1.1% by May 31, 2024, and 2.1% by February 28, 2025, indicating sustained demand and market activity in the region.
Tyler, TX
- Growth Projection: Tyler is expected to witness gradual growth in home prices, with a forecasted increase of 0.6% by March 31, 2024, followed by 1.3% by May 31, 2024, and 2.1% by February 28, 2025. These projections reflect the town's resilience and attractiveness to potential buyers and investors.
Waco, TX
- Growth Projection: Waco also presents opportunities for appreciation in home prices, with anticipated growth of 0.4% by March 31, 2024, 0.7% by May 31, 2024, and 2% by February 28, 2025. These forecasts underscore the city's appeal and potential for investment in the real estate market.
Wichita Falls, TX
- Growth Projection: In Wichita Falls, moderate growth in home prices is projected, with an expected increase of 0.5% by March 31, 2024, 0.9% by May 31, 2024, and 1.9% by February 28, 2025. These figures highlight the region's stability and ongoing demand for housing.
Mineral Wells, TX
- Growth Projection: Mineral Wells is forecasted to experience incremental growth in home prices, with a projected rise of 0.5% by March 31, 2024, 0.9% by May 31, 2024, and 1.9% by February 28, 2025. These projections indicate sustained market activity and investment potential in the area.
Hereford, TX
- Growth Projection: Hereford rounds out the list with promising projections for home price appreciation. Anticipated growth stands at 0.6% by March 31, 2024, 1% by May 31, 2024, and 1.9% by February 28, 2025, underscoring the town's potential for investment and development in the real estate sector.
Palestine, TX
- Growth Projection: Palestine presents opportunities for modest growth in home prices, with an expected increase of 0% by March 31, 2024, 0.7% by May 31, 2024, and 1.8% by February 28, 2025. While growth may be more subdued compared to other areas, the town still offers potential for appreciation in property values.
Mount Pleasant, TX
- Growth Projection: Lastly, Mount Pleasant is forecasted to see gradual growth in home prices, with a projected rise of 0.5% by March 31, 2024, 1.2% by May 31, 2024, and 1.6% by February 28, 2025. These figures highlight the town's stability and appeal to prospective homeowners and investors.
Killeen, TX
- Growth Projection: Killeen is expected to see moderate growth in home prices, with a forecasted increase of 0.3% by March 31, 2024, and remaining steady at 0.3% by May 31, 2024, before experiencing a more significant uptick to 1.5% by February 28, 2025. These projections suggest a gradual but promising trajectory for the local real estate market.
Sherman, TX
- Growth Projection: Sherman presents opportunities for appreciation in home prices, with anticipated growth of 0.7% by March 31, 2024, increasing to 1% by May 31, 2024, and 1.4% by February 28, 2025. These figures highlight the town's attractiveness to potential buyers and investors, driven by factors such as economic development and quality of life.
Fredericksburg, TX
- Growth Projection: Fredericksburg is forecasted to experience moderate growth in home prices, with a projected increase of 0.8% by March 31, 2024, followed by 1.2% by May 31, 2024, and 1.2% by February 28, 2025. These projections underscore the town's appeal as a desirable residential destination, driven by its scenic beauty and cultural offerings.
Dallas, TX
- Growth Projection: While Dallas may see more modest growth compared to other areas, it still presents opportunities for appreciation in home prices. Projections indicate a potential increase of 0.3% by March 31, 2024, 0.7% by May 31, 2024, and 0.9% by February 28, 2025, highlighting the city's resilience and ongoing demand for housing.
Del Rio, TX
- Growth Projection: Del Rio is poised for moderate growth in home prices, with an estimated increase of 0.7% by March 31, 2024, rising to 1.4% by May 31, 2024, and remaining steady at 0.9% by February 28, 2025. These projections reflect the town's appeal to both residents and investors, supported by factors such as its strategic location and economic opportunities.
Gainesville, TX
- Growth Projection: Gainesville presents opportunities for modest growth in home prices, with an expected increase of 0.4% by March 31, 2024, 0.7% by May 31, 2024, and 0.8% by February 28, 2025. While growth may be more subdued compared to other areas, the town still offers potential for appreciation in property values, making it an attractive option for both buyers and investors.
Will The Texas Housing Market Crash?
The Texas housing market currently presents a nuanced landscape, influenced by various economic and demographic factors. While it's impossible to predict the future with certainty, there are currently no indicators suggesting an imminent housing market crash in Texas. The market has shown resilience and adaptability, with various factors such as population growth, economic stability, and housing demand supporting its stability.
Continued monitoring of key metrics, staying informed about economic trends, and leveraging real-time data from reliable sources like Zillow are crucial for making well-informed decisions in the dynamic Texas housing landscape.
Real estate markets inherently exhibit cyclical patterns, and fluctuations are not uncommon. Prudent investors and homebuyers will approach the market with a keen understanding of these dynamics, adapting their strategies to navigate complexities and capitalize on opportunities as they arise.
Top 10 Places to Buy a House in Texas
According to Niche.com, these are the top 10 areas to buy a home based on home valuations, property taxes, homeownership rates, housing prices, and real estate trends. 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.
- Cottonwood Creek South, a neighborhood in Richardson, TX
- Arapaho, a neighborhood in Richardson, TX
- Lakeside City, TX
- Fulshear, a town in Fort Bend County, TX
- Canyon Creek South, a neighborhood in Richardson, TX
- Heights Park, a neighborhood in Richardson, TX
- Shady Hollow, a suburb of Austin, TX
- Red Lick, Bowie County, TX
- Woodway, a suburb of Waco, TX
- Timberbrook, a neighborhood in Plano, TX
Top 10 Texas Cities Having Highest Real Estate Appreciation Rates Since 2000
According to Neighborhoodscout.com, these are the top ten cities in Texas that have had the highest real estate appreciation since the year 2000.
- Westworth Village
- Gustine
- Balmorhea
- Garden City
- Mico
- Runge
- Granger
- Encinal
- Falls City
- Wingate
Sources:
- https://www.zillow.com/tx/home-values/
- https://www.redfin.com/state/Texas/housing-market
- https://www.recenter.tamu.edu/articles/technical-report/Texas-Housing-Insight
- https://www.neighborhoodscout.com/tx/real-estate
- https://www.niche.com/places-to-live/search/best-places-to-buy-a-house/s/texas/
- https://www.fhfa.gov/DataTools/Tools/Pages/Four-Quarter-Heat-Map.aspx
- https://www.fhfa.gov/AboutUs/reportsplans/Pages/Fannie-Mae-Freddie-Mac-Reports.aspx
- https://www.recenter.tamu.edu/articles/technical-report/outlook-for-the-texas-economy