Texas Housing Market Trends and Predictions for 2024

Considering the challenges faced by homebuyers due to elevated mortgage rates and a decline in home sales, the current state of the Texas housing market leans towards a buyer’s market. The increase in average days on the market and a decrease in active listings contribute to a market where buyers may have more negotiating power. However, the future market outlook, with construction starts on the rise and continued construction values, suggests a potential shift.

Texas Housing Market Trends

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?

Despite a continuous decline in mortgage rates, the Texas housing market has seen a decline in total home sales. In December, the state experienced a 1.9 percent month-over-month decrease, with a total of 25,430 homes sold. Notably, San Antonio was the only major city to report an increase, with home sales rising by 7.1 percent to 2,684. However, Houston, Austin, and Dallas faced declines of 16.6 percent, 9.2 percent, and 3.5 percent, respectively.

The affordability problem persists for homebuyers, as even with falling rates, they remain elevated.

How Competitive is the Texas Housing Market?

The median home price in Texas fell by 0.7 percent to $332,300, with Dallas being the only city to experience a decrease of 1 percent. Austin, on the other hand, saw the greatest price boost, reaching a 4.2 percent gain and achieving its highest level since January. The overall market is characterized by homes priced between $200,000-$300,000 and $300,000-$400,000, accounting for 26 and 24 percent of total home sales, respectively.

Despite the challenges, the Texas Repeat Sales Home Price Index shows a 2 percent increase from the previous year. Houston leads in annual appreciation with a 2.6 percent year-over-year increase, while Austin shows the lowest annual appreciation at negative 3 percent.

Are There Enough Homes for Sale in Texas to Meet Buyer Demand?

The average days on market (DOM) for homes in Texas climbed to 57, marking the first increase since April. Houston and Dallas experienced increases of seven and four days, respectively, with DOM reaching 50 and 49 days. Austin and San Antonio had minor fluctuations from the previous month, with 77 and 68 days on the market, respectively.

Although housing supplies remain elevated, active listings fell for the first time since May, totaling 103,395 listings. San Antonio was the only major city to post a monthly increase at 1 percent, while Austin experienced the largest drop of 13.3 percent to 8,307 listings. Despite the fall, levels are still comparable to 2019.

New listings also fell by 1.89 percent to 42,658 in December. All major metros posted monthly decreases, contributing to a small decrease in the months of inventory (MOI) to 3.6. Austin played a significant role in the fall, dropping over 10 percent.

What is the Future Market Outlook for Texas?

Construction permits in Texas remained unchanged, with single-family construction permits just shy of a quarter of a percent decrease from November, totaling 12,392 issuances. Despite this, construction starts increased by 2.5 percent month over month to 12,222 units.

The year-to-date total single-family starts value climbed to $29.8 billion, reflecting an increase from $27.7 billion in November. Houston and Dallas accounted for over 60 percent of the state’s construction value, with the construction market mirroring 2019 values since May.

Texas Housing Market Predictions for 2024 and 2025

The following data provides valuable insights into the current state of the Texas housing market. According to Zillow, the average home value in Texas is a key indicator of the market’s health. At $296,582, it’s imperative to note the 0.7% dip over the past year. This figure provides potential homebuyers and sellers with a benchmark for understanding the overall value trend in the state.

Pending Time:

Homes in Texas go pending in approximately 40 days, indicating a relatively swift pace in the real estate market. This quick turnaround time can be attributed to various factors, such as demand, location, and property condition.

Inventory Metrics:

• For Sale Inventory: As of January 31, 2024, Texas has a total of 102,955 homes listed for sale. This figure serves as a crucial measure of the available housing stock, influencing factors like supply and demand in the market.
• New Listings: In January 2024, there were 21,375 new listings, showcasing ongoing activity and the addition of fresh properties to the market.

Sale Price Metrics:

• Median Sale to List Ratio: As of December 31, 2023, the median sale to list ratio is 0.983, offering valuable insights into how close homes are selling to their listed prices.
• Median Sale Price: At $318,067 (as of December 31, 2023), the median sale price reflects the middle point of all home sale prices, providing a clearer picture of the market’s pricing dynamics.
• Median List Price: As of January 31, 2024, the median list price is $351,333, indicating the midpoint of all homes currently listed for sale.

Sales Performance:

• Percent of Sales Over List Price: As of December 31, 2023, 17.0% of sales occurred over the list price, highlighting instances where demand exceeded initial property valuations.
• Percent of Sales Under List Price: Conversely, 62.7% of sales were under the list price, demonstrating a majority of transactions occurring below the initial asking prices.

Anticipated Surge in Home Prices: Hotspots in Texas

As we look ahead, specific areas in Texas are poised to experience noteworthy increases in home prices, presenting lucrative opportunities for investors and potential challenges for homebuyers. According to the latest data, the following regions stand out with anticipated growth:

1. McAllen, TX:

In McAllen, a metropolitan statistical area (MSA) in Texas, the home prices are expected to rise by 0.3% by February 29, 2024, with a more substantial increase of 1.4% by April 30, 2024. The surge continues, reaching an impressive 6.8% by January 31, 2025. This upward trajectory suggests a robust real estate market in McAllen, making it an attractive destination for potential home sellers and investors.

2. Brownsville, TX:

Brownsville, another MSA in Texas, showcases a similar trend with a projected home price increase of 0.6% by February 29, 2024, escalating to 2.3% by April 30, 2024, and a notable 6.3% by January 31, 2025. This pattern suggests a sustained demand for housing in Brownsville, making it a focal point for those considering property investments.

3. Jacksonville, TX:

Jacksonville, an MSA in Texas, anticipates a stable growth in home prices, starting with no change by February 29, 2024, followed by a moderate increase of 1.2% by April 30, 2024, and a more substantial uptick of 6.2% by January 31, 2025. This progression highlights the resilience of the real estate market in Jacksonville, offering potential opportunities for both buyers and sellers.

4. Stephenville, TX:

Stephenville, an MSA in Texas, presents a positive outlook for home prices, with an expected increase of 0.3% by February 29, 2024, followed by a more substantial rise of 1.6% by April 30, 2024, and a noteworthy 6.1% by January 31, 2025. This indicates a thriving real estate environment in Stephenville, making it a focal point for those seeking to capitalize on property appreciation.

5. Waco, TX:

Waco, an MSA in Texas, forecasts a gradual climb in home prices, starting with a modest increase of 0.2% by February 29, 2024, followed by a steady rise of 1.1% by April 30, 2024, and a commendable 5.6% by January 31, 2025. This sustained growth positions Waco as an attractive market for individuals interested in the real estate landscape.

6. El Paso, TX:

El Paso, an MSA in Texas, expects a positive trend in home prices, projecting a 0.4% increase by February 29, 2024, followed by a more substantial uptick of 1.4% by April 30, 2024, and a noteworthy 5.3% by January 31, 2025. This indicates a flourishing real estate market in El Paso, offering potential opportunities for both buyers and sellers.

7. Wichita Falls, TX:

Turning our attention to Wichita Falls, an MSA in Texas, the home prices are expected to rise by 0.2% by February 29, 2024. This increase becomes more pronounced, reaching 1.3% by April 30, 2024, and culminating in a substantial 5.3% rise by January 31, 2025. Wichita Falls emerges as a market with notable potential for property appreciation, attracting both investors and individuals looking to buy or sell homes.

8. Corsicana, TX:

Corsicana, another MSA in Texas, exhibits a positive outlook for home prices, with a projected increase of 0.1% by February 29, 2024. This growth intensifies, reaching 1.2% by April 30, 2024, and leveling off at a commendable 5.2% by January 31, 2025. Corsicana presents itself as a market to watch, offering opportunities for those interested in the evolving real estate landscape.

9. Hereford, TX:

Hereford, an MSA in Texas, anticipates a favorable trajectory in home prices, starting with a 0.4% increase by February 29, 2024. The momentum continues, reaching 1.3% by April 30, 2024, and stabilizing at 5.2% by January 31, 2025. Hereford stands out as a market showcasing growth potential, catering to individuals seeking to capitalize on property appreciation.

10. Sherman, TX:

Sherman, an MSA in Texas, presents an optimistic picture for home prices, with a projected 0.4% increase by February 29, 2024. This growth intensifies further, reaching 1.6% by April 30, 2024, and plateauing at a commendable 5.1% by January 31, 2025. Sherman emerges as a promising market, attracting attention from both buyers and sellers in the real estate arena.

11. Mount Pleasant, TX:

Mount Pleasant, an MSA in Texas, anticipates stability in home prices, starting with no change by February 29, 2024. The market then sees a moderate increase, reaching 1.3% by April 30, 2024, and maintaining a steady climb at 5% by January 31, 2025. Mount Pleasant offers a balanced outlook, appealing to those looking for a market with steady and predictable growth.

12. Tyler, TX:

Tyler, an MSA in Texas, envisions a positive trend in home prices, projecting a 0.1% increase by February 29, 2024. This growth becomes more pronounced, reaching 1.2% by April 30, 2024, and stabilizing at 4.9% by January 31, 2025. Tyler emerges as a market with potential for property appreciation, making it a focal point for both investors and homebuyers.

13. Palestine, TX:

Finally, Palestine, an MSA in Texas, anticipates a nuanced scenario in home prices, starting with a marginal decrease of -0.3% by February 29, 2024. The market then sees a modest increase, reaching 0.7% by April 30, 2024, and maintaining a gradual climb at 4.8% by January 31, 2025. Palestine’s market dynamics present a unique landscape, requiring careful consideration for those navigating the real estate sector.

14. Mineral Wells, TX:

Examining Mineral Wells, an MSA in Texas, the home prices display a stable trend with no change by February 29, 2024. However, a modest increase of 0.7% is anticipated by April 30, 2024, followed by a steady climb to 4.8% by January 31, 2025. Mineral Wells showcases a market with measured growth, appealing to individuals seeking a balanced and predictable real estate environment.

15. Gainesville, TX:

Gainesville, another MSA in Texas, presents an optimistic outlook for home prices, projecting a 0.4% increase by February 29, 2024. This positive momentum continues, reaching 1.4% by April 30, 2024, and stabilizing at 4.7% by January 31, 2025. Gainesville emerges as a market with potential for property appreciation, attracting attention from both investors and individuals looking to make real estate transactions.

16. Killeen, TX:

Killeen, an MSA in Texas, anticipates a modest trajectory in home prices, starting with no change by February 29, 2024. The market then sees a gradual increase, reaching 0.4% by April 30, 2024, and maintaining a steady climb at 4.6% by January 31, 2025. Killeen offers a stable real estate environment, appealing to those looking for measured growth in property values.

17. Dallas, TX:

The Dallas metropolitan statistical area (MSA) in Texas forecasts a positive trend in home prices, projecting a 0.1% increase by February 29, 2024. This growth becomes more pronounced, reaching 1% by April 30, 2024, and stabilizing at 4.4% by January 31, 2025. Dallas, being a major urban center, continues to be an influential player in the Texas real estate market, offering diverse opportunities for buyers and investors.

18. San Angelo, TX:

San Angelo, an MSA in Texas, envisions a positive trajectory in home prices, projecting a 0.3% increase by February 29, 2024. This upward momentum continues, reaching 1.3% by April 30, 2024, and stabilizing at 4.1% by January 31, 2025. San Angelo emerges as a market with potential for property appreciation, making it a focal point for both investors and homebuyers.

19. Sulphur Springs, TX:

Finally, Sulphur Springs, an MSA in Texas, presents a nuanced scenario in home prices, starting with a slight decrease of -0.4% by February 29, 2024. The market then sees a modest increase, reaching 0.7% by April 30, 2024, and maintaining a gradual climb at 4.1% by January 31, 2025. Sulphur Springs’ market dynamics present a unique landscape, requiring careful consideration for those navigating the real estate sector.

Anticipated Decline in Home Prices: Areas Facing Challenges in Texas

While certain regions in Texas are poised for growth, it’s essential to acknowledge areas where home prices are expected to face declines. Analyzing the data for these regions provides insights into potential challenges for both sellers and investors in the real estate market.

1. Alice, TX:

In Alice, an MSA in Texas, there’s a significant anticipated decline in home prices. The decrease is projected to be -1.5% by February 29, 2024, followed by a more substantial drop of -2.5% by April 30, 2024, and culminating in a notable -6.8% by January 31, 2025. These figures indicate challenges in the Alice housing market, emphasizing the importance of cautious decision-making for those involved in real estate transactions in this region.

2. Pecos, TX:

Pecos, another MSA in Texas, faces a negative trajectory in home prices, with a projected decline of -1% by February 29, 2024. This downward trend persists, remaining at -1% by April 30, 2024, and reaching -4.9% by January 31, 2025. Pecos highlights a challenging market for property values, urging individuals to carefully consider their options when dealing with real estate in this region.

3. Sweetwater, TX:

Sweetwater, an MSA in Texas, anticipates a decline in home prices with a projected decrease of -1.5% by February 29, 2024. The trend continues with a further drop of -2% by April 30, 2024, and stabilizes at -4.8% by January 31, 2025. These figures indicate a challenging real estate landscape in Sweetwater, emphasizing the need for thorough analysis and strategic decisions for those involved in the housing market.

4. Zapata, TX:

Zapata, an MSA in Texas, faces a negative outlook for home prices, projecting a decline of -0.8% by February 29, 2024. The downward trend continues, reaching -1.7% by April 30, 2024, and stabilizing at -4.6% by January 31, 2025. Zapata signals challenges in the real estate market, urging stakeholders to approach transactions in this region with caution and strategic planning.

5. Lamesa, TX:

Lamesa, an MSA in Texas, anticipates a decline in home prices, with a projected decrease of -0.9% by February 29, 2024. This negative trajectory persists, remaining at -1.4% by April 30, 2024, and reaching -4.2% by January 31, 2025. Lamesa highlights challenges in maintaining property values, emphasizing the need for informed decision-making in real estate transactions within this region.

6. Beeville, TX:

Beeville, an MSA in Texas, faces a decline in home prices, with a projected decrease of -0.6% by February 29, 2024. This downward trend persists, reaching -1.3% by April 30, 2024, and stabilizing at -3.6% by January 31, 2025. Beeville signals challenges in maintaining property values, emphasizing the need for strategic planning and careful consideration in real estate transactions within this region.

7. Raymondville, TX:

Raymondville, another MSA in Texas, anticipates a nuanced scenario for home prices. While a modest decrease of -0.2% is projected by February 29, 2024, there’s a potential for a slight recovery with a 0.2% increase by April 30, 2024. However, the overall trend remains negative, stabilizing at -2.8% by January 31, 2025. Raymondville presents a unique landscape, requiring careful consideration for those navigating the real estate sector in this region.

8. Big Spring, TX:

Big Spring, an MSA in Texas, faces a moderate decline in home prices, with a projected increase of 0.3% by February 29, 2024, followed by a slight rise of 0.4%. However, the overall trend turns negative, stabilizing at -2.2% by January 31, 2025. Big Spring emphasizes the challenges in maintaining property values, urging stakeholders to approach transactions in this region with caution and informed decision-making.

9. Rio Grande City, TX:

Rio Grande City, an MSA in Texas, anticipates a decline in home prices, with a projected decrease of -0.9% by February 29, 2024. The negative trajectory continues, reaching -1.4% by April 30, 2024, and stabilizing at -2% by January 31, 2025. Rio Grande City presents challenges in maintaining property values, requiring careful consideration for those involved in real estate transactions within this region.

10. Beaumont, TX:

Beaumont, an MSA in Texas, faces a modest decline in home prices, with a projected decrease of -0.2% by February 29, 2024. The negative trend continues, albeit at a slower pace, stabilizing at -0.1% by April 30, 2024, and reaching -1.4% by January 31, 2025. Beaumont emphasizes the importance of cautious decision-making and strategic planning for individuals involved in real estate transactions in this region.

11. Plainview, TX:

Plainview, an MSA in Texas, anticipates a gradual decline in home prices, with a projected decrease of -0.8% by February 29, 2024. The negative trajectory continues, reaching -1.2% by April 30, 2024, and stabilizing at -1.1% by January 31, 2025. Plainview highlights challenges in maintaining property values, emphasizing the need for careful consideration and informed decision-making in real estate transactions within this region.

12. Borger, TX:

Borger, an MSA in Texas, experiences a unique scenario in home prices. While there is a positive trend with a projected increase of 0.3% by February 29, 2024, and a further rise of 0.9% by April 30, 2024, the overall trajectory turns negative, stabilizing at -0.7% by January 31, 2025. Borger highlights the importance of careful consideration and strategic planning for individuals navigating the real estate sector in this region where fluctuations may occur.

13. Dumas, TX:

Dumas, another MSA in Texas, showcases a similar pattern with a positive trend initially. A projected increase of 0.5% by February 29, 2024, and 1% by April 30, 2024, is observed. However, the overall trend turns negative, stabilizing at -0.6% by January 31, 2025. Dumas emphasizes the need for careful consideration and informed decision-making for individuals involved in real estate transactions, considering the potential fluctuations in this region.

14. Port Lavaca, TX:

Port Lavaca, an MSA in Texas, faces a modest decline in home prices, with a projected decrease of -0.5% by February 29, 2024. The negative trend continues, albeit at a slower pace, stabilizing at -0.6% by April 30, 2024, and reaching -0.2% by January 31, 2025. Port Lavaca emphasizes the importance of cautious decision-making and strategic planning for individuals involved in real estate transactions in this region.

15. Snyder, TX:

Snyder, an MSA in Texas, anticipates a unique scenario in home prices. While there is a positive trend with a projected increase of 0.4% by February 29, 2024, and a further rise of 1.2% by April 30, 2024, the overall trajectory turns slightly negative, stabilizing at -0.2% by January 31, 2025. Snyder highlights the importance of careful consideration and strategic planning for individuals navigating the real estate sector in this region where fluctuations may occur.

16. Levelland, TX:

Levelland, an MSA in Texas, experiences a nuanced scenario in home prices. While there is a positive trend with a projected increase of 0.1% by February 29, 2024, and a further rise of 0.4% by April 30, 2024, the overall trajectory turns slightly negative, stabilizing at -0.1% by January 31, 2025. Levelland emphasizes the need for careful consideration and informed decision-making for individuals involved in real estate transactions, considering the potential fluctuations in this region.

17. Andrews, TX:

Andrews, an MSA in Texas, showcases a similar pattern with a positive trend initially. A projected increase of 0.2% by February 29, 2024, and 0.3% by April 30, 2024, is observed. However, the overall trend turns slightly negative, stabilizing at -0.1% by January 31, 2025. Andrews emphasizes the importance of cautious decision-making and strategic planning for individuals involved in real estate transactions, considering the potential fluctuations in this region.

Will The Texas Housing Market Crash?

The Texas housing market currently presents a nuanced landscape, influenced by various economic and demographic factors. As of January 31, 2024, the average home value in Texas stands at $296,582, showing a slight 0.7% decrease over the past year. While this dip may raise concerns, it’s essential to examine the broader trend and assess whether it signifies a temporary fluctuation or a more significant issue. The housing inventory, with 102,955 homes for sale and 21,375 new listings, indicates an active market, but a detailed analysis of supply and demand dynamics is necessary for a comprehensive understanding.

The median sale price of $318,067 (as of December 31, 2023) and the median list price of $351,333 (as of January 31, 2024) provide insights into buyer and seller expectations. Regional variations also play a crucial role, with certain areas anticipating growth while others face declines in home prices. Examining potential economic factors such as job market stability, interest rates, and government policies is essential.

While there are indicators of concern, it’s premature to predict a comprehensive crash in the Texas housing market. 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.

1. Cottonwood Creek South, a neighborhood in Richardson, TX
2. Arapaho, a neighborhood in Richardson, TX
3. Lakeside City, TX
4. Fulshear, a town in Fort Bend County, TX
5. Canyon Creek South, a neighborhood in Richardson, TX
6. Heights Park, a neighborhood in Richardson, TX
7. Shady Hollow, a suburb of Austin, TX
8. Red Lick, Bowie County, TX
9. Woodway, a suburb of Waco, TX
10. 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.

1. Westworth Village
2. Gustine
3. Balmorhea
4. Garden City
5. Mico
6. Runge
7. Granger
8. Encinal
9. Falls City
10. Wingate

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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