Learn more about the housing market in Texas

Every state is unique when it comes to the real estate market, and the TX housing market is no exception. That’s why it’s critical to understand the market you live or operate in. Whether you’re renting, buying, or selling, it will impact many aspects of your life. 

Key Takeaways

1. Inventory has grown faster than the national average, easing price pressure and giving buyers more negotiating power heading into 2026.
2. Metros are cooling unevenly. Austin remains well below its 2022 peak, while Houston and Dallas show signs of stabilization rather than rapid rebound.
3. Affordability is still a challenge. Even with slower price growth, home prices and rents continue to outpace income gains across much of Texas.
4. Long-term demand remains strong. Population growth, job creation, and ongoing new construction support housing stability, making a market crash unlikely.

Texas Housing Market Overview 

Texas has a historically robust housing market. The state’s favorable weather, active lifestyle, and sunny neighborhoods have attracted movement into Austin and other Texas cities from more expensive cities like Seattle, Los Angeles, and San Francisco. Inventory climbed substantially in recent years to meet the booming demand. Inventory has climbed substantially in recent years to meet the booming demand, but in 2025 many Texas markets have seen prices soften and inventory rise, with median home prices statewide edging down slightly year-over-year while buyers gain negotiating power.  

Austin has continued to experience one of the sharpest corrections in the country, with home values remaining well below their 2022 peak and sellers increasingly cutting prices to attract buyers. Zillow data shows Austin’s home values fell more than 10% from peak levels and have struggled to rebound through 2024–2025. Houston has also cooled, with Redfin ranking it among the top U.S. metros for declining homebuyer demand as rising inventory and affordability pressures reshaped buyer behavior.

Home prices in Austin and other major Texas metros have begun stabilizing after steep corrections. Redfin data shows that median sale prices in both Austin and Houston posted modest year-over-year gains through late 2024 and into 2025, signaling a slow recovery rather than a rapid rebound. While prices remain below their pandemic-era peaks in Austin, consistent monthly increases suggest the market is finding a new equilibrium going into 2026 as buyers adjust to higher rates.

The housing market in Texas is an outlier in the sense that supply increased while declining in the rest of the U.S. Texas metros have added significantly more active listings and new construction than most states in 2025, easing price pressure and giving buyers more leverage compared to other major markets as we head into 2026.

Texas Real Estate Market Trends 

To understand the housing market Texas operates within, it’s important to keep up with trends. Let’s look at some key ones in Texas. 

Note: These statistics are based on Redfin’s monthly housing data from October 2025. 

Median Home Price 

Texas’ median sale price is $341,500, according to Redfin’s monthly housing market data. This is a decline of about 2.7% since October of last year. However, median prices in larger cities like Austin, at $540,000, and Dallas at $435,000 are much higher than that figure, while prices have skyrocketed in cities like Highland Park ($2.1 million) and West University Place ($2.0 million). A report from Harvard found that Texans struggling mightily with home and rental prices is at an all-time high.  

Number of Homes Sold in October 2025

The number of homes sold in Texas in May was 26,069, down 2.7% from last year according to the Redfin dataset. This metric gives us a good picture of the current sales volume in Texas. It’s also important to keep in mind that this number are less inflated compared to other months since nationally speaking, sales usually peak during the spring and summer months and slow in the winter. In fact, the National Association of Realtors (NAR) predicts that in February and March alone, sales activity increases by as much as 34% and prices by 3%. 

Median Days on Market (DOM) 

Days on market (DOM) is a measure of the average length of time a home remains listed on the market before being put under contract. A lower DOM signals a highly competitive seller’s market with more pressure on buyers to make higher offers and remove contingencies. A higher DOM signals a buyer's market as sales are slower and sellers have less leverage. 

The current median DOM in Texas is 74 days. This is above average compared to other states, and the state’s larger inventory means that this is a buyers’ market, a rarity among states in America right now. 

New Supply Statistics 

Housing supply in Texas remains higher than most of the U.S., helping relieve pressure on both renters and buyers. As of late 2025, Texas has roughly four months of housing supply, compared to about three months nationally, giving buyers more options and reducing upward price pressure. Ongoing new construction across major metros has kept inventory elevated, contributing to slower price growth and improved affordability relative to many other states.

Property Tax Rate 

The average property tax rate in Texas is 1.68%, according to Rocket Mortgage. This places Texas’s average property tax rate as the 6th highest in the U.S. However, keep in mind that property taxes vary widely depending on the specific county of Texas and the value of the home. 

Foreclosure Rate in Q1 of 2025

In the first quarter of 2025, about 1 in every 3,313 housing units in Texas had a foreclosure filing, placing the state near the middle of U.S. foreclosure rates and reflecting rising foreclosure activity compared with recent years.

Hottest Local Markets in Texas 

Texas has several hot urban markets. Here are three of the most noteworthy: 

1. Dallas

Dallas is the ninth-largest city in America. It’s a modern metropolis with a vibrant arts scene, an active nightlife, an iconic cowboy culture, and a myriad of dining options. Its strong local economy is bolstered by a booming job market (2% rise in additional jobs in 2025).

The housing market is in an interesting place in Dallas. Median home prices have flattened year over year, while sales activity has cooled as higher interest rates and expanded inventory weigh on demand. According to Redfin’s October 2025 data, Dallas saw fewer closed sales and a higher share of listings with price reductions, signaling a more balanced and negotiable market. Homes now spend around one month on the market on average, indicating that while demand remains steady, sellers no longer hold the same leverage they did during the peak years.

Home prices continue to outpace income growth in Texas, making homeownership less attainable for many households. In the Dallas–Fort Worth metro, housing costs remain elevated relative to wages, contributing to affordability strain despite moderating price growth.

2. Houston

Houston is the fourth-largest city in America and a Southern staple. It’s known for the Space Center Houston, a vibrant arts and history scene, and busy fine dining. 

Houston’s housing market shows that buyers and sellers have largely adjusted to higher rates and slower growth, which is a trend that will likely continue going into 2026. According to the Houston Association of Realtors home sales rose modestly year over year in early 2025, while inventory remained significantly higher than pre-pandemic levels.

3. Austin

Like many of its Texan city counterparts, Austin experienced a housing boom during the COVID-19 pandemic. Now, though, many local real estate agents believe the market is returning to normal. 

A mix of higher mortgage rates, slower in-migration from high-cost coastal markets, cooling investor demand, and a surge in new construction has driven Austin’s market reset. Price changes have not been uniform across the metro. Central and western neighborhoods have seen the sharpest corrections, while suburban areas have also softened, though at a slower pace.

As of October 2025, Austin has a median home sale price of $540,000 (per Redfin data), which is down 0.093% year-over-year. That said, the total number of homes sold stayed nearly the exact same as last year, but had a DOM of 89 days.

Factors Impacting the Texas Housing Market 

The housing market Texas is home to is influenced by macroeconomic trends and more granular economic factors specific to the state. 

Mortgage Rates 

High mortgage rates are a continuing challenge for would-be homeowners in the U.S. Texas’s average rates for 30-year mortgages in October of 2025 are just below the national average at 5.990%. Higher interest rates deter borrowing and discourage those who already own homes from putting their homes on the market. Many homeowners report feeling “locked in” to their current homes, as it is unlikely they will secure a mortgage rate as low as their current one on their next property. Prospective buyers in Texas should monitor mortgage rates in the coming months for a better understanding of how they impact the housing market. 

Inflation and Cost of Living 

Mortgage rates are tied to inflation, another massive contributing factor to the affordability of housing and the state of housing markets in general. Inflation has increased the cost of living for many across the U.S., including in Texas. This means fewer people can truly afford to limit housing costs to less than 30% of their monthly income.  

Population Changes and Demographics 

The population in the Lone Star state increased every year between 2010 and 2022. It was an incredibly popular place to move to during and right after the height of the pandemic.While growth slowed in 2024–2025 compared to peak pandemic years, Texas remains one of the most popular destinations for both domestic and international movers.

As of 2024 population estimates, Texas remains one of only two states with more than 30 million residents, alongside California. Unlike Florida, where growth is driven largely by domestic migration, Texas’s population gains continue to come from a mix of domestic migration, international immigration, and natural increase, according to U.S. Census Bureau data.

Between 2000 and 2024, Texas added more than 10 million residents, representing roughly a 40% population increase. This sustained growth places Texas among the fastest-growing large states in the country and continues to support long-term housing demand, even as short-term market conditions adjust.

Other Factors for Texas: Insurance 

The increased likelihood of dangerous extreme weather events make insurance a major factor in the Texas housing market. Homeowners paid $3,851 every year, on average, for insurance in the state. This is $1,751 more per year than the national average. However, the cost has slightly lowered in recent years.

Texas Housing Market Forecast 

The Texas market balanced out quite a bit recently. It’s not the hot market it once was. Supply increased beyond demand, which is a rarity in America right now. Per Texas housing market predictions (2024) from many experts, demand will stay strong, though, because Texas remains a popular place to live due to a lack of state income tax and reasonable cost of living.  

Over the next five years, most experts expect home prices to grow at a slower rate (around 2% to 4%). Data from the U.S. Census Bureau and Redfin show that Houston and Dallas ranked among the top U.S. metros for new construction activity throughout 2024 and into 2025, and builders remain active heading into 2026. This steady pipeline of new homes is a key reason Texas has avoided the extreme inventory shortages seen elsewhere.

Texas is not expected to return to the ultra-competitive conditions of the early pandemic years in the near term. Instead, the state appears positioned for a more balanced housing market through 2026—one where supply growth, steady demand, and slower price appreciation coexist.

Likelihood of Texas Housing Market Crash  

A housing market crash in Texas is highly unlikely. The job market is healthy with a 4.1% unemployment rate, while private-sector employment grew faster than the U.S. average year over year. Texas also benefits from a lower-than-average cost of living, which helps sustain housing demand even as affordability tightens. While wages in Texas remain slightly below the national average, steady job growth and population inflows continue to support housing stability rather than a sharp downturn.

While a crash isn’t likely, experts believe Texas’ housing market will continue to cool off and balance out. This means sellers won’t be selling for prices anywhere near the pandemic level. Texas’ overall healthy economy, job opportunities, and stricter lending standards than the ones that led to the national crash in 2008 should also help prevent a crash. 

Ultimately, the outlook for Texas’ housing market isn’t promising, but it’s not discouraging, either. There appears to be a semblance of stability, even though predicting the housing market perfectly is always impossible. 

Forecast for The U.S. Housing Market 

Now that we’ve looked at Texas’s housing market, let’s zoom out a little bit. What about the U.S. housing market? What do you need to keep an eye on in the coming years? 

The United States' current median existing-home sale price is around $415,200 per the National Association of Realtors. The inventory, though, remains low. A balanced market typically has a 5-to-6-month supply, but the current figure is 3 months, keeping conditions constrained.

We’re currently in a seller’s market with buyers looking at continued rising house prices—although they are rising at a slower pace compared to previous years.. The same trend can be seen with renters. Housing continues to appreciate, in general.

Dr. Lawrence Yun, Chief Economist and Senior Vice President of Research, National Association of Realtors, believes the housing market will appreciate 15 to 25% over the next five years. He thinks that the seller’s market will continue because housing inventory will remain low. In 2026, he predicts that existing home sales will rise an additional 13%. Yun expects mortgage rates to stabilize at the lower end of the current 6-7% range through 2025 and 2026 as the Federal Reserve continues gradual rate cuts. There's an anticipation of a more balanced market in the coming years, with moderate price growth and a greater amount of Americans re-entering the market.

Hybrid work also impacts the housing market. This shift in work culture means suburbia will continue to grow. States like Texas, the Carolinas, Tennessee, and Florida should see continual growth.

The number of single-family homes built decreased over the past couple years while the number of multi-family homes increased due to lower prices and a demand for affordable housing. Year-to-date single-family housing starts were down about 7.1% in 2025, whereas starts for buildings with five or more units were up roughly 14.5% Higher mortgage rates and inflation (affecting price of materials) were the main causes.

Lower income households continue to struggle in the current housing market. This trend appears likely to continue into the foreseeable future. According to the National Association of Home Builders, approximately 74.9% of U.S. households were unable to afford a newly built median-priced home in 2025. Without enhanced supply or helpful subsidies, the outlook is that many Americans will still wrestle with housing affordability in the years to come.  

Texas Rental Market 

The rental and buying market are obviously closely linked. When home prices fall, landlords are more likely to buy properties to rent out. Home prices and rental prices are correlated as well because a hot market means prices rise.  

Rents were more unaffordable than ever in 2021 and 2022 in the U.S. In 2022, 22.4 million households paying rent said it was unaffordable, which is the highest that figure has ever been, according to a January report from the Joint Center for Housing Studies at Harvard University. The study found that half of all renters in the United States spent over 30% of their income on rent and utilities.  

The rental market cooled after 2023 as new supply came online and demand normalized, but affordability pressures remain. Through 2025 and into 2026, rent growth has continued to outpace wage gains, meaning many renters are still spending a higher share of income on housing despite slower rent increases overall.

Moreover, high interest rates are keeping borrowing and transaction activity down. Over half the banks surveyed by the Federal Reserve reported that demand for multifamily loans decreased year-over-year. The pandemic caused a housing disparity that isn’t going away anytime soon. Unaffordable housing is a serious issue across America.  

Texas’s current rental market is influenced by these trends but not dominated by them. Rent in Texas is generally affordable but certainly varies across the state. Below is a snapshot of Texas’s rental market based on data pulled from Zillow: 

Texas Rental Market Key Trends 

• Median rent: $1,875

• Month-over-month rent change: -$12

• Year-over-year rent change: -$5

• Available rentals: 84,059

Conclusion 

The Texas housing market in 2025 and heading into 2026 reflects a shift toward greater balance after years of volatility. Prices have stabilized in many metros, inventory has expanded more than in most states, and buyer competition has eased compared to peak pandemic years. Whether you’re planning to buy or sell in Texas, closely watching trends in home prices, supply levels, and mortgage rates remains essential, as these factors will continue to shape decision-making across the state’s real estate market.

FAQs

Is Texas currently a buyer’s or seller’s market?

As of late 2025, Texas leans closer to a buyer’s market than most states due to higher inventory and longer days on market, though conditions vary by city.

Are home prices in Texas still falling?

Statewide prices have largely stabilized, with some metros posting modest year-over-year gains. Austin remains an exception, still recovering from a sharper correction.

Why is Texas different from other states right now?

Texas added more housing supply than most states through new construction, preventing the severe inventory shortages seen elsewhere and helping cool prices.

Is a housing market crash likely in Texas?

A crash is considered unlikely due to steady job growth, population inflows, stricter lending standards, and a healthier supply-demand balance than in many states.

What should buyers and sellers watch heading into 2026?

Key factors include mortgage rates, inventory levels, local job growth, and insurance costs, all of which will influence pricing and demand across Texas markets.