Texas Housing Market Enters Significant Correction in 2025

In early 2025, the Texas housing market entered a significant correction phase, marked by a substantial increase in housing inventory and a corresponding decline in home prices across the state.

By April 2025, active listings in Texas reached approximately 123,000, a 53% increase over typical levels. Real estate analyst Nick Gerli highlighted this trend, stating, "We need to talk about Texas. Listings just hit 123,000 in April 2025. 53 percent higher than normal. And prices are now dropping across the state."

In Austin, the median home price declined by 7.7% year-over-year, settling at $498,500. Homes are also taking longer to sell, with the average days on market increasing to 96 days. Similarly, San Antonio has experienced a narrowing price gap between new and existing homes, making new constructions more accessible to buyers.

Several factors have contributed to this market correction:

1. Elevated Mortgage Rates: Mortgage rates have remained between 6% and 7%, reducing buyer confidence and purchasing power.
2. Slowing Domestic Migration: Domestic migration into Texas declined by 62% in 2024, leading to reduced housing demand.
3. Affordability Challenges: In the Austin region, the median family income in 2024 was $126,000, translating into a maximum affordable home price of between $360,000 and $410,000. However, the median sales price was $445,000, highlighting the affordability gap.

The housing market correction has several social and economic implications. The increase in inventory and price reductions have shifted the market dynamics, providing buyers with more negotiating power and opportunities to purchase homes at more reasonable prices. Sellers are facing longer times on the market and may need to adjust pricing strategies to attract buyers. The slowdown in the housing market could have broader economic effects, particularly in industries related to real estate and construction.

While housing market corrections have occurred in the past, the current situation is notable due to the combination of high inventory levels, elevated mortgage rates, and slowing migration. Looking ahead, experts suggest that the market may continue to favor buyers, with potential for further price adjustments. However, external factors such as economic shifts or policy changes could influence these trends, underscoring the importance of staying informed and adaptable to navigate the market successfully.