Texas is a state that is known for its booming cities and growth. Many Texans right now are wondering and asking: Are home prices dropping in Texas? In 2025, there has been a noticeable shift in the real estate market affecting all investors and buyers alike, i.e., first-time homebuyers, seasoned buyers, and homeowners who are interested in selling their property.
In this blog, we will break down the factors affecting the price of a home, cities with the most significant property price declines, and what your next move should be while searching for new homes. So, let’s get into it.
Are Home Prices Falling in Texas?
According to the recent market and real estate trends and data, Texas real estate and home values have taken a dive in 2024 for a second consecutive year. Falling home prices is expected to continue in 2025 as well. However, the dip doesn’t indicate housing market crash in Texas, but it is getting a moderate course correction after years of hype after the pandemic.
In the first quarter of 2025, especially February 2025,, the state-wise median home prices across Texas real estate market have seen a decline in median home sale prices of 3.2% year over year to $330,000 for average home.
Cities Facing the Largest Decline
- Austin: 6.4% with stabilizing trends.
- Dallas: 4.1% expected to bottom out.
- San Antonio: 3.5% with a slight drop.
- Houston: 2.8% and will face further decline.
Housing Experts say that these trends reflect a shift of high-demand urban cores to affordable secondary cities where prices are more stable.
Driving Factors of the Shift in the Texas Market
The Texas market is facing a dip, but what are the factors that are driving the moderation in home prices in Texas cities? and why are home prices dropping in Texas? Let’s find out with the help of the real estate research.
Interest Rates
Housing affordability is taking a hit due to continuously high borrowing costs. The 30-year mortgage rates for typical homes are stuck between 6.8% to 7.2%, which makes the aspiring home buyers in the market pause their home search, especially the first-time home buyers.
Increased Inventory
Compared to the high demand and low inventory in 2021 and 2022, Texas has more listings and homes for sale available. In some of the cities, the monthly supply has increased two times, giving the buyers more negotiating power than before.
Slow Job Growth and Outmigration
The rates in Texas housing market have slowed slightly due to the layoffs in the job market, inflation, and lifestyle changes in cities like Austin and Dallas. As a result, it has reduced the inbound migration that was once the cause of the rapid price increase.
Affordability
The affordability ceiling has been reached among the buyers of the urban centers. Where the market was rapid and houses were sold in days, there has been self–correction in the market where the houses linger for days on the market, leading sellers to slash prices.
Is it a Good Time to Buy a House in Texas
For the people who have been waiting, it is time to take action and make 2025 their year of home buying or decide for a new construction. The mortgage rates in the buyer’s market are still high, however, the sellers are active in the market in Austin and San Antonio due to the high inventory levels.
Benefits for the Aspiring Buyers
- Reduced prices.
- Seller concessions.
- Fewer bidding wars.
- A high number of house choices in suburban, rural, metro areas.
If you want to buy a home in Texas, you must consider negotiating to bring the house prices down or find additional housing and closing cost assistance for high-supply neighborhoods.
Should Sellers Hold Off on Selling?
If you are expecting a peak like 2021 as a seller in the seller’s market, you need to adjust your expectations. If you bought your home before 2020, you might already have achieved a solid appreciation of your property.
Tips for Sellers in 2025
- Price competitively in the market aggressively.
- Stage your home in a way that you stand out.
- Working with a local professional real estate agent helps a lot to work efficiently, knowing the micro-market trends.
2025 Trends and Beyond
Although we have already faced the worst corrections in the housing market in Texas, most analysts and real estate experts are expecting mild declines or flat home price growth until late 2025 if the interest rates keep increasing. Predictions for 2025 also says that the house demands will rebound mid to late 2026 due to:
- Large population growth.
- Employment opportunities.
- Rental fatigue in Gen Z and Millennials.
We recommend that home buyers to keep an eye on the Federal Reserve actions, see home prices and inflation reports. It will help you benefit if the rate cuts happen and the market changes its momentum.
If you are unsure of the market shifts and how it will impact your real estate goals and housing costs, connect with a licensed adviser or Realtor like Nitin Kumar. They have a deep knowledge of the market and can make data-driven decisions for you today to make long-term gains tomorrow.
Opportunities in Secondary and Rural Markets
The major cities are facing huge price declines, giving many suburban and rural areas around Texas an opportunity to remain resilient. Cities like Waco, Tyler, and College Station are stable and have seen a slight rise in prices. It is because:
- The cost of living in these cities is lower.
- The local economy is stable.
- There are more number of homes for sale in the entry-level home segments.
First-time home buyers, remote workers, and investors who are seeking cash cow properties, can get great value by investing in these areas.
Is Texas Still a Good Investment?
In spite of the price dip and interest rate hypes, the Texas may still be one of the best real estate market. You still have the edge if you invest in Texas, because:
- There is no state income tax.
- Great for businesses.
- Impressive population growth from the past decade.
- Huge corporation relocations like Tesla and Oracle.
As a matter of fact, you can benefit from this market decline in order to create buying opportunities for your long-term investment goals.
Conclusion
So, are home prices dropping in Texas? Yes, however, not everywhere and not forever. You can take it as a market correction post-pandemic, rather than a collapse. In short, buying a home is always a good investment.
There are huge opportunities for buyers. Sellers need new strategies to follow if they want to sell their properties. Both buyers and sellers need to keep an eye on the market and watch how 2025 unfolds.
Whether you are a first-time buyer, an investor, or a repeated buyer, working with an experienced professional will help you get the most out of these market changes.
Frequently Asked Questions
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Q: Is the housing market going down in Texas?
A: Yes, in many parts of Texas, the housing market is going down for the second consecutive year. This trend is, however, not a market collapse but a market correction. After the post-pandemic hike, it is adjusting to reflect higher interest rates, slow migration, and reaching the affordability ceiling.
Q: Should I buy a house now or wait for a recession?
A: Timing in the real estate market is always risky. If you think you are financially ready and have your dream home in your access, it can be a strategic time to buy a home. It is beneficial because sellers are more ready to negotiate.
Q: Is now a good time to sell a house in Texas?
A: It depends on you and your situation. If you are relocating or downsizing, it might still be a good time to sell your house. The market is no longer hot-selling and require realistic prices, strong marketing, and require offering incentives like down payment and closing cost assistance.
Q: Should I buy a house now or wait until 2025?
A: In the first quarter, the interest rates are high as ever, and markets are favoring buyers in many regions. If you act sooner, you will have the upper hand in negotiation, and help in home purchase before competition gets back in the market. But if your finances are not in your favor and you have not found the right fit, waiting will make more sense.
