Texas Housing Market: Trends and Forecast 2025-2026

Why the Texas Housing Forecast for 2025–2026 Matters

Texas remains one of the country’s most closely watched housing markets because it sits at the crossroads of major forces: ongoing population growth, a job engine tied to energy and tech, and mortgage rates that can quickly shift affordability. After the rapid price run-up of 2020–2022 and the reset that followed in 2023–2024, many buyers and sellers are asking the same questions: Are home prices going up again? Will mortgage rates fall enough to unlock more inventory? And what happens to rent trends if more multifamily supply comes online?

This article lays out a clear, Texas-specific look at the statewide outlook for 2025 real estate and 2026. You’ll see the macroeconomic drivers that shape demand, the supply and demand balance that influences negotiations, and realistic scenarios for home prices, sales volume, and rents—using commonly referenced market indicators and widely cited forecast ranges from major housing economists and lenders. Forecasts are estimates, not guarantees, but they can help you plan with more confidence.

Quick Snapshot: Where Texas Stands Heading into 2025

Texas entered 2025 with a market that looks more “normalized” than the frenzy years, but still uniquely Texas: strong in-migration, a large pipeline of new construction in key metros, and meaningful differences between neighborhoods and property types. Buyers generally have more leverage than they did a few years ago, especially in areas with higher inventory and active new-build competition. At the same time, resale supply remains constrained in many submarkets because homeowners with ultra-low mortgage rates are reluctant to move.

• Demand: Supported by population growth, job formation, and household formation, but still rate-sensitive.
• Supply: Improving in several metros due to more listings and new construction completions; still tight in some “close-in” neighborhoods and desirable school zones.
• Prices: Largely range-bound in many areas—more about “who has negotiating power” than a uniform statewide surge.
• Rents: Moderating where new multifamily deliveries are heavy; steadier in smaller markets with less new supply.

Statewide Macroeconomic Drivers Shaping 2025–2026

1) Population Growth and Household Formation

Texas continues to add residents faster than most states, fueled by domestic migration (people moving in from other states) and international migration. Population growth matters because housing demand is ultimately driven by households: when more people form households, they need places to live—either as renters or owners.

What to watch for 2025–2026: Even if net migration cools from peak levels, Texas is still projected to grow. That supports baseline housing demand, especially in job-rich corridors such as the Dallas–Fort Worth Metroplex, the Austin–San Antonio corridor, and Greater Houston. It also creates steady demand in “secondary” markets where affordability, commutes, and new development attract buyers.

• Green flag for demand: Continued inflows of working-age residents and families.
• Red flag for pricing power: If affordability pressures cause more households to double up, delay buying, or choose renting longer, the pace of home price growth can flatten even with population growth.

2) Job Market, Wages, and Industry Mix

Texas has a diverse job base that includes energy, healthcare, logistics, manufacturing, professional services, and technology. That diversity helps cushion the statewide market when one sector cools. For housing, the most important job-market signals are employment growth, wage growth, and layoffs in high-paying sectors that drive buyer purchasing power.

2025–2026 outlook: Most mainstream economic scenarios expect Texas job growth to continue, but at a more sustainable pace than the post-pandemic rebound. If hiring remains steady, it supports sales volume and reduces forced selling. If job growth slows sharply, buyers become cautious and sellers face longer days on market.

• Green flag for home prices: Broad-based job growth paired with wage gains that outpace inflation.
• Red flag: Concentrated layoffs in markets with heavy exposure to one industry, which can soften demand quickly in specific submarkets.

3) Mortgage Rates and the “Lock-In” Effect

Mortgage rates are the single biggest swing factor for Texas housing activity because they directly change monthly payments. When rates rise, affordability drops; when rates fall, demand often returns quickly. Rates also create the “lock-in effect”: homeowners who secured 2%–4% mortgages are less likely to sell and trade into a 6%–7% loan, which limits resale inventory.

Rate environment scenarios for 2025–2026 (estimates): Many large forecasters have expected a gradual easing path rather than a quick drop. A reasonable planning range is:

• 2025: 30-year fixed mortgage rates often fluctuating around 5.75%–6.75% (with periods above or below depending on inflation and economic data).
• 2026: Potentially 5.25%–6.25% if inflation cools and the broader rate environment eases; higher if inflation proves sticky.

Why this matters for supply and demand: If rates drift lower, more buyers qualify and more sellers list (because trading up hurts less). That can increase sales volume even if home prices don’t surge. If rates stay elevated, the market can remain “stuck”: fewer listings, fewer buyers, and more negotiation around concessions.

4) Cost of Ownership in Texas: Property Taxes and Insurance

Texas affordability is not just about the purchase price. Property taxes and homeowners insurance can meaningfully impact the monthly payment—especially for first-time buyers comparing Texas to other states. These costs also influence rent trends, because landlords often pass through higher expenses.

2025–2026 outlook: While individual bills vary by county and taxing district, buyers should expect property taxes to remain a major line item. Insurance costs can also be volatile, particularly in storm-exposed regions along the Gulf Coast and in hail-prone parts of North Texas.

• Practical tip: When you run affordability numbers, compare total monthly costs (principal, interest, taxes, insurance, HOA), not just the mortgage payment.

Texas Housing Market Indicators to Watch

Supply and Demand: Inventory and Months of Supply

In plain terms, supply and demand in housing comes down to how many homes are available versus how many buyers are shopping. Two common indicators are active listings and months of supply (how long it would take to sell the current inventory at the current sales pace).

• Balanced market: Often considered around 5–6 months of supply (varies by local norms).
• Seller-leaning: Typically under ~4 months of supply.
• Buyer-leaning: Often over ~6 months of supply.

Texas has been moving closer to balance in many metros compared with the ultra-tight conditions of 2021–2022. However, inventory can still be tight for entry-level homes in good locations, while higher-price tiers may show more supply and longer marketing times.

Days on Market and Price Reductions

Two “real world” signals for buyers and sellers are days on market and the frequency of price reductions. When demand is strong, homes sell quickly and price cuts are rare. When supply builds or buyers get cautious, days on market rise and more sellers adjust pricing.

2025–2026 expectation: A more normal rhythm: well-priced homes in move-in-ready condition can still sell fast, while overpriced listings may sit and require reductions or concessions.

New Construction Pipeline

Texas has a large new construction footprint, especially in the suburbs of Dallas–Fort Worth, Houston, San Antonio, and parts of Austin’s perimeter. New construction matters because it can add supply even when resale listings are limited by the lock-in effect.

What it means for 2025 real estate: Builders may keep offering incentives—such as rate buydowns, closing cost credits, and design upgrades—if they need to maintain absorption (sales pace). Those incentives can indirectly pressure resale sellers, who may have to compete on price, condition, or concessions.

Texas Housing Forecast 2025–2026: Statewide Outlook (With Numbers)

Forecasting Texas home prices and activity is best done in ranges because outcomes hinge on mortgage rates, employment, and how much inventory comes to market. The projections below reflect common forecast bands used by major housing economists nationally, adjusted to Texas market dynamics such as strong population growth and a robust new-build sector.

Home Price Forecast: 2025–2026

Baseline scenario (most likely in a “soft landing” economy):

• 2025: Texas home prices (statewide) change approximately -1% to +3% year over year.
• 2026: Texas home prices change approximately 0% to +4% year over year, assuming rates ease modestly and employment remains stable.

Upside scenario (rates fall faster, demand rebounds):

• 2025: +3% to +6%
• 2026: +4% to +7%

Downside scenario (rates stay high longer or job growth weakens):

• 2025: -2% to -5%
• 2026: -1% to +2%

Important Texas nuance: “Statewide” averages can hide big differences. Markets with heavy new construction and higher investor activity may see flatter home prices, while supply-constrained neighborhoods with top schools, short commutes, and limited buildable land can be more resilient.

Sales Volume Forecast: 2025–2026

Sales volume is heavily rate-driven. Even modest declines in mortgage rates can bring sidelined buyers back—especially move-up buyers who have been waiting for payments to improve.

• 2025: Total existing-home sales in Texas could range from flat to +8% versus 2024, depending on rate movement and consumer confidence.
• 2026: If rates trend lower and listings improve, sales volume could rise another +3% to +10%.

In plain language: the market can see more transactions even if home prices don’t jump. That’s typical during normalization cycles, when buyers and sellers slowly adjust to a new interest-rate environment.

Supply Forecast: Inventory and New Listings

Inventory outlook: Expect gradual improvement rather than a flood of listings. The lock-in effect remains a real constraint. But more homeowners do move each year for life reasons—job changes, kids, caregiving, divorce, retirement—so listings can rise with time even without a major rate drop.

• 2025: Active inventory likely trends modestly higher year over year in many metros, with pockets of buyer-leaning conditions in outer suburbs and new-build corridors.
• 2026: Inventory could improve further if mortgage rates fall into the mid-5% range and more sellers feel comfortable listing.

New construction: Texas is positioned to add supply through building more than many states. Still, builders respond to demand; if absorption slows, they may reduce starts even while finishing homes already underway.

Rent Trends Forecast: 2025–2026

Rent trends in Texas depend on how many new apartments deliver and how fast renters absorb them. Several Texas metros have had a large multifamily construction wave, which typically cools rent growth until the new supply is leased up.

Statewide rent trend estimates:

• 2025: Average rents in many Texas markets may be -1% to +3% year over year (with stronger growth in undersupplied submarkets and weaker growth where deliveries are concentrated).
• 2026: Rent growth may re-accelerate modestly to +1% to +4% if deliveries slow and population growth continues.

Key nuance: Even in a “flat rent” year, your rent payment can still rise at renewal depending on the specific property, concessions expiring, or operating costs (taxes, insurance, repairs). Meanwhile, renters may see better move-in specials in areas with lots of new buildings competing for leases.

Regional Texas Market Dynamics: What Varies by Metro

Texas isn’t one housing market—it’s many. The statewide outlook provides a baseline, but local supply and demand can be very different based on job concentration, affordability, and construction volume.

Dallas–Fort Worth: Jobs and Suburban New Builds Shape Pricing

DFW often behaves like a “two-speed” market: close-in neighborhoods with limited inventory can stay competitive, while far-suburban areas with abundant new construction can feel more price-sensitive. For 2025 real estate, watch builder incentives, inventory in fast-growing counties, and the spread between list price and final sales price.

• Likely trend: More negotiation leverage for buyers in areas with many similar homes and high resale competition.
• Pricing: Often steadier in established areas; more variable in new-build corridors.

Houston: Affordability and Industry Mix, With Localized Insurance Considerations

Houston’s size and affordability relative to other major metros can support demand, but the region is also sensitive to industry cycles and insurance costs in certain locations. New construction continues to add supply, which can keep home prices from accelerating too quickly.

• Likely trend: A fairly balanced market overall, with sharper differences between inner-loop neighborhoods and newer suburban submarkets.

Austin: Post-Surge Reset Meets Longer-Term Fundamentals

Austin experienced one of the strongest pandemic-era price run-ups and then a noticeable cooldown. That has made Austin a focal point for conversations about home prices, affordability, and market “normalization.” The longer-term fundamentals—jobs, lifestyle appeal, and migration—still matter, but pricing is more sensitive to mortgage rates and inventory than it was during the boom.

• Likely trend: Price movement that is closer to flat-to-modest growth in the baseline scenario, with pockets that swing faster depending on inventory and buyer demand.

San Antonio: Steady, Value-Oriented Demand

San Antonio often feels steadier than higher-volatility markets. Relative affordability can keep demand resilient, particularly for entry-level and mid-priced homes, though mortgage rates still influence monthly payments significantly.

• Likely trend: More stable pricing and transaction activity, with seasonal swings.

South Texas, West Texas, and Smaller Markets: Micro-Trends Matter

Outside the major metros, local employment drivers (energy, manufacturing, healthcare, education, military), housing stock, and new development can create very different outcomes. In some smaller markets, limited inventory can keep prices firm even if sales volume is modest. In others, a single large employer can influence demand.

Single-Family vs Multifamily: Two Markets Moving at Different Speeds

Single-Family Homes: Resale vs New Construction

The single-family market in Texas is shaped by the tug-of-war between resale supply (limited by the lock-in effect) and new construction (more abundant in growth corridors). For many buyers, the choice comes down to whether you want an established neighborhood or a new home with builder incentives.

Pros and Cons: Existing Home vs New Build (Texas Edition)

• Existing homes (resale) pros: Mature landscaping, established communities, often closer to job centers, potentially lower tax assessments than brand-new builds (case-by-case).
• Existing homes (resale) cons: Fewer choices in tight neighborhoods, potential maintenance or deferred repairs, fewer financing incentives.
• New builds pros: Modern layouts and efficiency, builder warranties, more availability in fast-growing areas, common incentives like rate buydowns and closing cost credits.
• New builds cons: Higher property tax impact in some areas (newer assessments), HOA costs, ongoing construction nearby, commute distance depending on location.

Multifamily: A Supply Wave That Can Cool Rent Trends

Multifamily construction has been a major storyline in Texas. When many new units deliver at once, properties often compete on price, concessions, or amenities, which can flatten rent trends. Over time, if starts slow and absorption continues (thanks to population growth), rent growth can stabilize and re-accelerate.

For renters in 2025, this can be good news: you may have more negotiating power in certain urban and high-growth suburban apartment nodes, especially during off-peak leasing seasons.

Seasonal Patterns in Texas Real Estate (And How 2025–2026 May Follow Them)

Texas real estate is seasonal. Even in unusual years, the calendar still matters.

• Spring (March–May): Typically the busiest period for listings and buyer activity; competition can heat up quickly for well-priced homes.
• Summer (June–August): Still active, especially for families timing moves around school; heat and vacation schedules can affect showing activity.
• Fall (September–November): Often a second wave of serious buyers; fewer listings can keep good homes competitive.
• Winter (December–February): Slower pace, but buyers are often motivated; this can be a good time to negotiate depending on inventory.

2025–2026 takeaway: If mortgage rates dip even modestly during a peak season, demand can surge quickly. If rates rise during spring, buyers may pause and inventory can accumulate into summer, improving leverage for shoppers.

What Buyers Should Do in 2025–2026 (Step by Step)

For buyers, the main challenge in 2025 real estate is managing affordability while making smart choices about location, property condition, and financing. Here’s a straightforward process that works well in Texas markets where conditions can change neighborhood by neighborhood.

Step 1: Get Clear on Your Real Monthly Budget (Not Just Price)

• Estimate principal and interest using a conservative mortgage rates assumption (don’t rely on best-case quotes).
• Add property taxes (Texas can be high; confirm local rates and exemptions).
• Add homeowners insurance (ask for real quotes early, especially in storm-exposed areas).
• Add HOA and maintenance estimates.

Common mistake: Shopping based only on purchase price and then being surprised by taxes, insurance, or HOA dues.

Step 2: Get Pre-Approved (Not Just Pre-Qualified)

Pre-approval is a more rigorous review of your income, credit, debts, and assets than a quick pre-qualification. In competitive Texas submarkets, a strong pre-approval helps your offer stand out.

• Pre-approval basics: You provide pay stubs, W-2s or tax returns (if self-employed), bank statements, and the lender runs credit.
• Ask your lender: What rate locks are available, what points cost, and what loan programs fit (conventional, FHA, VA, USDA in eligible areas).
• Plan for volatility: Mortgage rates can move week to week; understand how that changes your payment.

Green flag: A lender who can explain options clearly and provide a written estimate with taxes and insurance placeholders.

Step 3: Choose Your Strategy: Resale, New Build, or Hybrid

• Resale focus: Best for buyers prioritizing location, character, or shorter commute.
• New-build focus: Best for buyers wanting more inventory choices and potential incentives.
• Hybrid approach: Compare both side by side; many buyers find the best value by staying flexible.

Step 4: Make an Offer With the Right Levers (Price, Concessions, Terms)

In a more balanced Texas market, winning isn’t always about the highest price. It’s often about clean terms and smart concessions that protect your budget.

• Price: Base it on comparable sales and current competition, not last year’s headlines.
• Seller concessions: Consider asking for closing costs, a rate buydown, or repairs instead of insisting on a big price cut (depending on the seller’s priorities).
• Option period (Texas-specific): Use the option period to complete inspections and negotiate repairs; understand your deadlines and option fee.
• Appraisal risk: If prices are flat and comps lag, don’t assume the appraisal will “make it work.”

Common mistake: Focusing only on sales price while ignoring rate buydown opportunities that can materially reduce monthly payments.

Step 5: Inspections, Negotiations, and Closing (Simple Timeline)

• Inspection: Schedule quickly during the option period; review roof age, HVAC, plumbing, foundation indicators, and drainage (important in many Texas soils and weather patterns).
• Negotiation: Request repairs, credits, or price adjustments based on material issues; prioritize safety and big-ticket items over cosmetics.
• Final underwriting: Avoid major financial changes (new debt, job changes) before closing.
• Final walk-through: Confirm agreed repairs are complete and the home is in expected condition.

Red flags: Repeated foundation patching without documentation, chronic drainage issues, unpermitted additions, or a seller unwilling to address major health and safety items.

What Sellers Should Do in 2025–2026 (Step by Step)

Sellers in 2025–2026 are in a market where buyers are more payment-conscious and more willing to walk away if a home feels overpriced or risky. The best strategy is to present a clean, well-documented home and price it according to today’s comps—not peak-era expectations.

Step 1: Price to Today’s Market, Not Yesterday’s

• Look at the most recent comparable sales and current active competition.
• Pay attention to list-to-sale price ratios and how often homes are reducing price.
• Consider that buyers compare your home to builder inventory and incentives.

Common mistake: Overpricing “to leave room to negotiate.” In a rate-sensitive market, that can lead to longer days on market and larger eventual reductions.

Step 2: Prepare the Home Like a Product (Condition Still Sells)

• Handle visible maintenance: caulking, paint touch-ups, HVAC servicing, roof documentation if available.
• Improve curb appeal: Texas buyers notice drainage, grading, and exterior condition.
• Declutter and stage lightly for better photos and showings.

Step 3: Use Concessions Strategically

With mortgage rates elevated compared to a few years ago, concessions can be a powerful tool.

• Closing cost credit: Helps buyers cover lender fees and prepaid items.
• Rate buydown: Can reduce a buyer’s monthly payment and expand your buyer pool.
• Repair credits: Useful when timing is tight or repairs are specialized.

Green flag: A seller plan that considers the buyer’s monthly payment reality, not just the headline price.

Step 4: Expect More Inspection Negotiations

In more balanced conditions, buyers often negotiate more firmly after inspections. Being proactive—by fixing known issues or providing documentation—can reduce friction.

• Have receipts for major work (roof, HVAC, plumbing).
• Address water intrusion, drainage, and electrical safety issues early.

Common Mistakes and Smart Signals in the 2025–2026 Texas Market

For Buyers

• Mistake: Waiting for a “perfect” rate and missing a good home at a fair price.
• Mistake: Ignoring property taxes and insurance when comparing homes.
• Smart signal: A listing with transparent disclosures, maintenance records, and realistic pricing.
• Smart signal: Opportunities to negotiate concessions that improve payment affordability.

For Sellers

• Mistake: Competing with new construction without adjusting for builder incentives.
• Mistake: Treating early feedback as noise instead of a pricing signal.
• Smart signal: Strong showing activity but no offers usually points to price or terms—not marketing.
• Smart signal: A clean inspection and appraisal path is increasingly valuable to buyers.

Affordability Outlook: What Could Change the Market Fast

Affordability is the hinge factor for Texas housing in 2025–2026. Three shifts can change conditions quickly:

• Mortgage rates: A move of even 0.50% can materially change the monthly payment and buyer pool.
• Insurance and taxes: Rising costs can reduce purchasing power even if home prices stay flat.
• Wages and employment: Strong job growth can keep demand steady; a slowdown can increase buyer caution.

That’s why the most realistic Texas housing forecast is one that anticipates range-bound home prices in many areas, paired with potentially improving sales volume if rates ease and inventory gradually loosens.

2025–2026 Scenarios: Putting It All Together

Scenario A: Gradual Rate Relief, Stable Jobs (Baseline)

• Mortgage rates: Drift down modestly
• Home prices: Mostly flat to low single-digit growth statewide
• Sales volume: Improves as move-up buyers re-enter
• Rent trends: Flat to modest growth, varying by multifamily deliveries
• Supply and demand: More balanced; negotiations normalize

Scenario B: Faster Rate Drops and Strong Demand (Upside)

• Mortgage rates: Fall faster than expected
• Home prices: Re-accelerate in desirable, supply-constrained areas
• Sales volume: Strong rebound
• Rent trends: Stabilize and potentially firm as households compete for limited single-family rentals

Scenario C: Rates Stay High or the Economy Softens (Downside)

• Mortgage rates: Remain elevated
• Home prices: Mild declines in some markets, especially where inventory is high
• Sales volume: Stays constrained
• Rent trends: Weaker in markets with heavy apartment supply

Practical Takeaways for 2025 Real Estate Decisions in Texas

If you’re buying in 2025–2026, the best approach is to focus on what you can control: your budget, your financing plan, and the quality of the home and location. If you’re selling, success is increasingly about pricing, presentation, and making the transaction easy for a payment-sensitive buyer.

• Buyers: Compare concessions (especially rate buydowns) alongside price; keep an eye on taxes and insurance; don’t skip inspections.
• Sellers: Price to current comps; expect negotiations; consider concessions that improve affordability; compete directly with new builds if they’re in your area.
• Investors: Underwrite conservatively—rent trends are softer in some metros due to multifamily supply, while single-family rental demand remains tied to household growth and affordability.

Bottom Line: Texas Housing Forecast 2025–2026

The most likely Texas housing forecast for 2025–2026 is a market that continues to normalize: modest home price movement (often flat to low single-digit growth), improving sales volume if mortgage rates ease, and rent trends that vary widely depending on how much multifamily supply hits each metro. With ongoing population growth and a large, diverse economy, Texas demand has a strong foundation—but affordability and monthly payments will remain the deciding factor for many households.