The Texas housing market is undergoing a significant correction, marked by a substantial increase in inventory and a decline in home prices across the state. As of April 2025, active listings reached approximately 123,000, a 53% increase over typical levels, leading to downward pressure on prices in major metropolitan areas such as Austin, Houston, and San Antonio.

In Austin, 80.2% of homes sold below their original listing price in February 2025, placing the city among the top five major metro areas with the highest percentage of under-list-price home sales. 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:

• Elevated Mortgage Rates: Mortgage rates have remained high, hovering around 7%, which has dampened buyer affordability and demand.

• Affordability Challenges: The median sales price in Austin remains about 40% higher compared to 2019, making homeownership less accessible for many potential buyers.

• Slowdown in Domestic Migration: The influx of new residents, particularly from states like California, has slowed, reducing the demand that previously drove up housing prices.

Analysts predict that this trend will persist throughout 2025, potentially leading to further price corrections in the Texas housing market. For example, San Antonio is projected to experience the largest housing price decrease among major Texas cities, with a forecasted drop of 4.0% in 2025.

The housing market correction carries several social and economic implications:

• Homeowners: Those who purchased properties at peak prices may face negative equity, particularly if they need to sell in the near term.

• Prospective Buyers: The correction could present opportunities for buyers who were previously priced out of the market, although high mortgage rates may still pose challenges.

• Local Economies: A slowdown in the housing market can impact related industries, including construction, real estate services, and retail sectors that benefit from home sales.

While housing market corrections are not uncommon, the current situation in Texas is notable due to the rapid inventory increase and the significant role of external factors such as migration patterns and mortgage rates. Comparatively, during the COVID-19 pandemic, Texas experienced a housing boom with rising prices and low inventory, making the current reversal particularly striking.

As the market continues to adjust, stakeholders—including homeowners, prospective buyers, and industry professionals—will need to navigate these changes carefully, considering both the challenges and opportunities presented by the evolving landscape.