Hot Texas housing market cooling off

After the pandemic drove Texas home prices to new heights, it seems the housing market is starting to cool off as there are now more homes for sale in Texas than at any time since Fall 2020, the Texas Tribune reported on Labor Day.

Overall home sales in Texas have declined by more than 5% from April to June, compared to the same period last year. Home sales have fallen a similar amount in major metro areas such as Dallas-Fort Worth, Houston and San Antonio. Austin has seen home sales fall more sharply by 12%. 

Sellers are now starting to cut prices to try to lure buyers, real estate experts told The Texas Tribune. 

“It’s still a seller’s market,” said Elizabeth McCoy, a Fort Worth real estate agent. “But certainly, we’re seeing buyers be able to have a little bit more choice. And that’s such a good thing.”

At the height of the pandemic, low mortgage rates and the shift to working from home drove buyers to snatch up homes, leading to the state’s supply plummeting and home prices rising an average of 28%. 

In Austin, housing prices peaked in May when the median price for a home hit $550,000, compared with $305,000 in January 2020. But the Federal Reserve’s move to raise interest rates has started to reverse the trend across the state. 

Still, real estate experts don’t expect home prices to come down anytime soon — just grow more slowly than they did over the past two years — because of Texas’ rise in population and its growing job market.

The cool-off in the housing market could give some relief to renters, said Laila Assanie, a senior business economist at the Federal Reserve Bank of Dallas.

Developers of multifamily apartment complexes haven’t slowed down like single-family homebuilders, which could ease pressure on renters.