Texas Housing Darling Cools Fast, Sales Momentum Breaks

Is the Texas Housing Market Cooling or Normalizing?

How quickly conditions have shifted is now visible across Texas metro areas.

Values have fallen from 2022 to 2025 in Austin, San Antonio, Dallas, and parts of Houston.

In Austin, the typical value fell about 24 percent.

It dropped from roughly $553,000 to $420,000, resetting affordability.

In Dallas-Fort Worth, a sharp inventory surge has tilted negotiations toward buyers as more deals close below list price.

Disruption Signals in Pricing and Demand

Rates, lock in, and sentiment

High interest rates and the lock in effect are constraining existing-home listings and transactions. TRERC expects 30-year mortgage rates to ease to 5%–5.6% by December 2026.

Weaker buyer sentiment and slower migration patterns are limiting the pool of move up and first time buyers.

Inventory and concessions

Builders carried inventory longer in 2025.

That expanded incentives and compressed margins.

Price cutting has offset inventory growth.

Real prices only stabilized after a small Q1 2025 decline statewide today.

Texas Home Sales: Where Momentum Is Returning

Texas home sales are showing signs of renewed momentum as mortgage rates ease and pending contracts firm heading into late 2025.

November closings fell sharply, yet year-to-date volume still tracks a 1 to 2 percent gain. Active inventory sat near a 5.2-month supply in November, above the 3–4 months that typically signals balance.

Pending contracts point to firmer December turnover. Mortgage rates near 6.4% are still shaping affordability and reinforcing a buyers’ market in segments with elevated listings.

Days on market averaged 72 in November, but 2026 is closer to 39.

Disrupted Recovery Pockets

Inventory near 2.9 months in 2026 sustains seller leverage even as new listings slipped about 1 percent in November.

Record 2025 listing totals and shifting migration patterns are redirecting demand, while investor activity stays focused in high-turnover metros.

Austin logged 844 December sales, up 4.1 percent, and Travis County closings rose 6.1 percent.

Pending sales increased 1.2 percent to 594, signaling refilling pipelines.

Texas Home Prices: Softer Values and Bigger Cuts

Sales pipelines are stabilizing in parts of Texas, but pricing power is weakening as listings accumulate.

Statewide typical value is $294,444, down 2.4% through December 31, 2025 on the Zillow Home Value Index.

Mortgage rates are hovering near 6.5%-7.5% in 2025, squeezing affordability for first-time and working-class buyers.

Homes take 56 days to reach pending, widening room for price cuts and appraisal impacts.

Metro pullbacks intensify

Austin values remain about 24% below the 2022 peak.

Travis County’s median slipped nearly 2% to $499,000.

Dallas-Fort Worth’s December 2025 median close price fell 6.25% to $375,000.

That reinforces softer tax assessments.

Market	Price metric	Change
Austin	2025 median $435,000	-2.4%
DFW	Dec median $375,000	-6.25%

Across Central Texas counties, declines like Bastrop’s 11.9% reset negotiations.

In-migration moderation limits rebound speed near-term materially.

Texas Housing Inventory: Months Supply and New Listings

As active listings accumulated into late 2025, Texas moved further into a buyer-leaning supply range.

Supply Swells Beyond Balance

Months supply hit 5.2 in November 2025, up from 4.5 a year earlier.

It rose from a 1.4 month pandemic low to roughly five to six months, above the three to four months viewed as balanced.

Unsold inventory averaged 103 days on market statewide.

New Listings Slow, Regional Gaps Widen

New listing activity cooled through November as seasonal listings dropped and inventory stayed elevated.

That combination pushed active supply down 4.9 percent since October.

Even so, inventory remained 16.2 percent above 2024, adding pricing pressure.

In DFW, about two-thirds of homes are selling below list price, amplifying buyers’ negotiating leverage.

Regional disparities stood out in Central Texas, where Austin ran near six months supply.

Suburban counties posted decade highs.

Texas Housing in 2026: Rates, Affordability, and Forecast

While Texas enters 2026 with inventory elevated and pricing reset, the outlook is being reshaped by easing financing conditions and improving affordability.

Mortgage rates are expected near 6.3%, loosening payment shock after the statewide correction.

Active inventory is up roughly 30% statewide, nudging major metros toward more balanced conditions.

Rates and Credit Pressure

Falling rates into the low-6% range could revive demand, but credit standards remain tight, limiting marginal borrowers.

Builders, especially in Houston, are leaning on rate buydowns and upgrades to keep deals moving.

Affordability and 2026 Forecast

Wage growth is projected to outpace prices, lifting first-time buyer capacity as the average home value sits near $294,444.

Sales are forecast to rise 2.5% to 349,000 units, with Austin stabilizing after a 24% peak-to-trough slide and regional migration steering growth toward cheaper metros.

Rents should rise about 2%.

Assessment

Texas housing is shifting from breakout expansion to a faster, more fragile late-cycle rhythm now.

Sales activity has cooled unevenly, with select metros stabilizing while others remain deeply slowed still.

Softer pricing and wider concessions signal buyers gaining leverage as affordability strain persists statewide today.

Rising inventory and higher months supply are resetting expectations, pressuring sellers to adjust quickly again.

Through 2026, outcomes hinge on mortgage rates, job growth, and the pace of new construction.

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