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Wondering what’s ahead for Texas' real estate market in 2025? With all the data at our fingertips, we're getting a clearer picture of some trends that could shape the housing landscape.
Let’s dive into what might be in store for 2025!
This article gives you valuable insights, but remember, it’s not and will never be investment advice. We pull data from a range of sources to provide you with the most accurate picture possible, yet we can’t guarantee complete accuracy. Markets are difficult to predict. Make sure to do your own research and consult a professional before making any financial moves. Any risks or losses are your own responsibility.
1) Major Texas metropolitan areas are expected to see price decreases in 2025
In Texas, several major metropolitan areas are expected to experience slight drops in home prices over 2025.
Specifically, Houston-The Woodlands-Sugar Land is projected to see a 1.1% decrease, while Austin-Round Rock-Georgetown may see a more significant 2.1% decline in prices from August 2024 to August 2025. The area is already down 18% from peak prices.
These predictions are largely due to notable increases in housing inventory across these metros. Dallas-Fort Worth-Arlington, for instance, has seen a 51.5% jump in listings, Houston-The Woodlands-Sugar Land’s listings have grown by 35.3%, and San Antonio-New Braunfels has experienced a 45.4% rise.
The increase in available homes is putting downward pressure on prices, creating a more balanced market in these areas.
Sources: Youtube, Norada Real Estate, Home Buying Institute
- Are Texas real estate prices dropping? Let's check 11 recent stats!
We created this infographic to show how property prices vary across different cities in Texas. It shows the median price as well as the price per sqft, making it easy to see which places might offer the best value. We hope you find it helpful.
2) The Texas housing market is shifting to a buyer's market in 2025
Over the summer of 2024, more than 35% of homes on the market in Texas saw price reductions, a strong signal of sellers adjusting to meet buyer demand.
Additionally, a significant 62.3% of sales closed below the list price as of March 31, 2024, contrasting sharply with the competitive bidding wars prevalent during the COVID-19 pandemic.
Inventory levels are also on the rise across all major metropolitan areas (surged by 23.6% year-over-year, reaching 116,320 homes in July 2024), giving buyers more options and reducing the competition that once drove prices up.
This increased supply means buyers now have more room to negotiate on price and terms, making the market less competitive and more advantageous for those looking to purchase.
Sources: CribMetrics Insights, Daltx Real Estate
- Yes, Texas is a good place to invest in real estate in 2025
3) A city in Texas will be the #1 real estate market in 2025
Yes, Dallas has become a hotbed for real estate investment, topping the 2025 Emerging Trends in Real Estate report by PwC and the Urban Land Institute, which analyzed data from over 2,000 industry experts.
It's easy to see why. With a 6.1% population surge since 2020, Dallas ranks as the fourth-fastest-growing U.S. city, attracting residents with job opportunities and a lower cost of living. Its job market has expanded by 11.2% post-pandemic, sustaining high demand for housing and services. Real estate investors see strong returns here, with five- and ten-year annualized returns of 7.9% and 8.8%, placing Dallas among top-performing metros. The city’s economy is diverse and home to 23 Fortune 500 companies, providing stability and resilience.
Finally, affordable housing, a median price of $382,000, and no state income tax further enhance Dallas’s appeal as a prime real estate market for 2025, supported by a tailored financial spreadsheet for informed investment decisions.
Source: PwC and Urban Land Institute
- Why Dallas claims the #1 spot in real estate for 2025
4) Dallas market will cool off in 2025
Yes, even it got ranked #1 (as see above), we think that Dallas' housing market is set to cool off in 2025, with several key indicators pointing to this shift.
Inventory has surged by 50% over the past year, giving buyers more options and negotiating power, while "days on market" have risen to over 50 days, indicating slower sales. Closed sales have dropped 7%, and single-family home sales are down 11.16%, reflecting reduced buyer activity. Economic factors play a role too; job growth in Dallas has slowed to 1.51%, which means fewer new buyers entering the market, and rental vacancies remain steady at 9.3%, showing that more people are opting to rent rather than buy.
Additionally, mortgage delinquencies have risen slightly to 3.9%, suggesting financial strain among some homeowners, potentially leading to more foreclosures and inventory. Builder confidence has also dropped by 15 points to 43, with developers cutting back on new projects as they anticipate lower demand. Meanwhile, home prices are softening, with the median price down by 1.2%, and the sale-to-list price ratio dipping to 97.1%, indicating that homes are now selling below asking prices.
These combined factors—rising inventory, slowing sales, reduced demand, cautious builders, and slight price drops—suggest that Dallas’ housing market is entering a cooling phase in 2025.
Sources: WhatsMyCashFlow, Benzinga, Business Insider, Us News Real Estate
- Why Dallas' real estate market is cooling off in 2025
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5) Texas homebuyers will get better credit conditions in 2025
Looking ahead, Texas homebuyers might get some relief in mortgage rates if current trends hold.
With the Federal Reserve expected to continue lowering rates (the Mortgage Bankers Association (MBA) projects that the average 30-year fixed mortgage rate will decrease to 5.5% by the end of 2025, down from 6.5% in 2024), mortgage rates could drop closer to pre-pandemic levels, though it’s unlikely they’ll reach the low 4% average from the 2010s.
As you can guess, this reduction is expected to enhance affordability for homebuyers.
Sources: Business Insider, Texas Real Estate Research Center, Mortgage Bankers Association
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6) Even if mortgage rates drop, few people are likely to sell their houses in Texas in 2025
Even though mortgage rates are expected to decline, the “rate-lock” effect could still be a big factor in the housing market.
According to a study by Batzer and colleagues in 2024, even if rates drop by two percentage points, this rate-lock effect could stick around for up to ten years.
So, what’s the rate-lock effect? It’s when homeowners with low-interest mortgages don’t want to sell because they’d have to buy a new home with a higher interest rate. This has been common lately, with many people holding onto mortgages that have much lower rates than what’s available now.
As a result, while lower rates might encourage some people to sell, the overall number of home sales and moves could still stay lower than what we saw before 2022.
Sources: The George Washington University, Texas Real Estate Research Center
7) There will be modest price growth across the state of Texas in 2025
According to Fannie Mae's Q3 2024 Home Prices Expectations Survey, home prices are expected to increase by 3.1%, while CoreLogic’s HPI Forecast is a bit more cautious, predicting a 2.3% rise from August 2024 to August 2025.
This outlook for modest growth is supported by strong job creation in Texas, with the state adding over 302,000 jobs from August 2023 to August 2024—putting it at the top nationwide in terms of job gains. Along with this, Texas is seeing a steady population increase, with a 6.4% growth expected from 2025 to 2030. In short, the Texas economy continues to outperform the national average, with no recession expected.
To keep up with the rising demand, Texas will need over 306,000 new homes in the coming years. Together, these factors are setting a stable foundation for continued growth in the state’s housing market.
Sources: Fannie Mae, CoreLogic
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We created this infographic using the latest market data to highlight the most competitive real estate markets in Texas is vs. other major cities in Texas. It shows the percentage of sales above the list price, a key indicator of market competition.
8) Affordability for Texas homebuyers may see slight improvements in 2025
The Texas Home Affordability Index (THAI), a measure that gauges the financial feasibility of purchasing a home based on home prices, income levels, and mortgage rates, is projected to continue its gradual rise.
Actually, the housing affordability situation in Texas has deteriorated significantly. In 2019, the statewide median family income was 62% higher than the amount needed to purchase a median-priced home. By 2023, this advantage had shrunk to just 7%.
By 2025, the THAI could reach around 1.15. This increase suggests that homes might be slightly more affordable than today, especially if (as discussed above) mortgage rates ease closer to the 5.5% to 6% range and income levels see modest gains.
However, even with these improvements, significant barriers to affordability remain. Home prices are still higher than pre-pandemic levels, and income growth isn’t expected to keep pace with housing costs. This means that, for many Texas households—particularly first-time buyers—affording a home will remain a challenge.
Unless there are more substantial increases in income or a sharper decrease in home prices, the affordability index is unlikely to return to the levels seen before the pandemic.
Sources: THAI, Texas Real Estate Research Center, Comptroller
9) San Antonio will experience the largest housing price decrease among major Texas cities in 2025
Given the current data and housing trends, San Antonio is positioned to experience the steepest decline in housing prices among major Texas cities in 2025.
At a projected price drop of 4.0%, San Antonio's decrease significantly outpaces Austin, Dallas, and Houston, which are forecasted at -2.1%, -2.0%, and -1.1%, respectively.
The city’s inventory levels have surged 45.4% year-over-year—among the highest in Texas—creating an oversupply that pressures prices downward. Homes are also sitting on the market longer, averaging 46 days, as high interest rates reduce affordability.
With Texas’s mortgage payment-to-income ratio at 31%, far above the historical 20%, affordability issues are hitting San Antonio especially hard, closely following Austin’s trend of price declines.
Additionally, frequent price reductions across listings indicate strain, setting San Antonio up for the most significant price correction among major Texas cities in 2025.
Sources: Yahoo Finance, U.S. News Re lAestate, Newsweek, Community Impact, MySA
- Here is why San Antonio housing prices might fall in 2025
10) Texas' real estate inventory will continue to grow through 2025
Texas' real estate inventory is set to keep growing through 2025 due to a combination of increasing construction activity, economic strength, and fluctuating mortgage rates.
As of October 2024, active listings reached 115,739, a notable rise, and this trend is expected to continue. In Q2 2024, listings had already jumped by 40.8% compared to the same period in 2023, yet prices held steady, with the median home price increasing only 0.6% year-over-year to $345,000.
According to the Texas Real Estate Research Center, single-family home construction was forecasted to grow by nearly 4% in 2024, bringing supply back to pre-pandemic levels and helping maintain median prices around $340,000.
Texas’s robust economy and population growth also keep demand strong, though higher inventory tempers the risk of price spikes, moving the market toward balance.
Sources: HousingWire, Dallas News, Robb Report
We pulled out the latest data to make this infographic. As you can see, it shows how real estate values have changed over the past 10 years in Texas vs other major places in Texas. Here, the percentage increase or decrease in market value will help you see long-term trends.
11) Domestic migration of higher-income residents will drive demand for premium housing in Texas in 2025
Texas ranks as the second-most-popular destination for domestic movers, following Florida. With a steady stream of new residents, especially from places like California, where the average incoming income is around $74,000, Texas is likely to see a rise in demand for mid- to high-end housing, especially in metropolitan areas.
Unfortunately, we don't have more recent data but, IRS data from tax years 2016 to 2021 reveals a consistent positive net migration of AGI to Texas, indicating that incoming residents generally have higher incomes than those leaving.
These new arrivals tend to have higher incomes, signaling a shift toward a wealthier demographic in the state. This trend could drive up demand for premium homes, as many of these newcomers may be looking for properties that reflect their income level.
As more affluent residents settle in Texas, we can also expect growth in businesses and services that cater to higher income levels. This might mean an increase in luxury shopping, upscale dining, and premium service providers, particularly in the larger cities.
Overall, this influx is likely to reshape certain parts of the Texas real estate market, boosting demand for higher-tier properties and contributing to the state’s economic landscape.
Sources: New York Post, IRS, Texas Real Estate Research Center, Comptroller of Public Accounts
12) The Texas real estate market for 2025 is likely to see strong luxury home demand
Despite recent price increases, Texas' luxury homes remain more affordable compared to similar properties in other major markets. This relative affordability continues to attract buyers seeking high-end real estate.
The strong demand of 2024 (in May, the sales volume of homes above $1 millions was up +28% year-over-year) for luxury homes, especially in North Dallas, Grapevine Lake, and the northern suburbs, suggests that the luxury sector will likely continue to see growth into 2025.
Also, the steady demand in areas like northern Collin County indicates a continued shift towards suburban areas where homes are larger and newer (they usually sold between $1 and $2 million), aligning with trends seen post-pandemic.
This year, the Dallas-Fort Worth (DFW) area recorded 11 home sales over $10 million (Houston had five and Austin had none). Noteworthy sales include Todd Graves, founder of Raising Cane’s, who bought a $15 million condo in the Knox Hotel and Residences. Another penthouse in this under-construction development is currently listed for $25 million.
If the trend continues, demand will be high in 2025 for historic Dallas homes with architectural charm, especially those upgraded with smart-home features.
Sources: New York Post, Texas Real Estate Research Center, The Real Deal
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What’s the outlook for Texas real estate in 2025?
In 2025, the Texas real estate market is expected to experience a mix of trends, with some areas seeing price decreases while others remain strong.
Major metropolitan areas like Houston and Austin are projected to see slight price drops, with Houston-The Woodlands-Sugar Land expecting a 1.1% decrease and Austin-Round Rock-Georgetown a 2.1% decline. This is largely due to increased housing inventory, with Dallas-Fort Worth-Arlington seeing a 51.5% jump in listings. This increase in available homes is putting downward pressure on prices, creating a more balanced market.
On the flip side, Dallas is highlighted as a top real estate market for 2025, driven by a 6.1% population surge and strong job growth. However, even Dallas is expected to cool off, with inventory surging by 50% and home prices softening slightly. Meanwhile, Texas homebuyers might benefit from better credit conditions, with mortgage rates projected to decrease to 5.5% by the end of 2025.
Overall, while some areas may see price declines, the Texas real estate market is expected to remain dynamic, with opportunities for buyers and investors, especially in the luxury home sector, which continues to attract interest due to its relative affordability compared to other major markets.