The number of homes for sale in the Texas market is now above pre-pandemic levels and continues to rise, with experts warning that the Lone Star State may soon be facing a pricing correction.
Why It Matters
The Texas housing market boomed during the pandemic when an influx of out-of-state newcomers moved to the state chasing warmer weather, cheaper housing, lower taxes and a more affordable cost of living.
To match growing demand, the state began building new homes at a faster pace than any state in the U.S., accounting for 15 percent of all new-home construction permits in 2024. However, the end of the pandemic and employers’ calls for workers to return to the office have slowed down migration to the state, and high mortgage rates are dampening demand from potential buyers.
What To Know
Traditionally, inventory levels are relatively low in January and February before exploding in the following months in time for the spring homebuying season, the busiest time for the housing market.
In Texas, inventory levels have been rising fast in these usually slow months. In February, the number of active listings in the state was 105,867, as reported by the Federal Reserve Bank of St. Louis, up from 102,552 in January. It was the highest level for the month of February in the past 10 years.
Redfin data shows an even larger number, with a total of 151,335 homes for sale in February, up 16 percent compared to a year earlier. Overall, Texas had five months of supply that month, with a one-month increase year over year—what normally indicates a balanced market between sellers and buyers.
The increase in inventory is clearly tipping the Texas market in favor of buyers. According to Redfin, only 11.5 percent of homes sold above list price, down 1.1 percentage point compared to a year earlier. On the other hand, 28.2 percent of homes had their asking price slashed by sellers, up 2.2 percentage points year over year.
As mortgage rates continue lingering between 6 percent and 7 percent and housing costs—including homeowner insurance and property taxes—are rising, homebuyers in the U.S. and Texas are still struggling with a lack of affordability. Many are cautious about making a purchase that could set them back financially, while others simply cannot afford to get on the property ladder.
Buyers’ reluctance is reflected in the data: 21,892 homes sold in Texas in February, down 6.2 percent year over year. Homes are also spending more time on the market, for a total of 75 days, up 12 days compared to a year earlier.
These dynamics are bringing down home prices at the state level. In February, according to Redfin, the median sale price of a home in Texas was $337,800, down 0.76 percent compared to a year earlier.
The Houston metropolitan area reported the first decline in single-family home sales in February, down 3 percent year over year, according to the Houston Association of Realtors. The median sale price of a home in the Greater Houston area declined by 1.2 percent to $325,000 in the same month—the first notable decline since November 2023.
In the former pandemic boomtown of Austin, 557 homes sold in February, down 18.2 percent year over year, and the median sale price of a home declined 0.49 percent year over year to $512,500, according to Redfin.
Experts expect this “price correction” to continue throughout 2025.
What People Are Saying
AKM, a real estate expert in Dallas, wrote on X, formerly Twitter: “People don’t realize just how quickly housing inventory is accumulating in Texas. Inventory typically bottoms in January and peaks in summer. In Jan 2025, inventory BOTTOMED at 102,552. This is HIGHER than the PEAK inventory in 2017 (96,644) and on par with the peak in 2018 (104,453). … Oh, and housing inventory still growing. Home price corrections are coming to Texas.”
Nick Gerli, the CEO of the real estate data platform Reventure App, wrote on X: “Housing inventory in Texas keeps exploding. Listings are now at highest level in a decade. Up 25 percent YoY and 30 percent from pre-pandemic norms. Such high supply is now causing downward price pressure all across the state. Don’t be surprised if markets like Dallas, Houston, and San Antonio start to trend into negatives on price growth.”
What Happens Next
Rising inventory in Texas is beginning to accumulate in the market without as many interested buyers as before, and prices are coming down in what experts may call a “correction” after years of overheating.
The post Texas Could Face Imminent Housing Market ‘Price Correction’ appeared first on Newsweek.
