2024 Texas Housing Market: A Year-End Overview and What’s Next

As we approach the end of 2024, the Texas housing market continues to captivate attention, with both challenges and opportunities shaping the landscape. Whether you're a homebuyer, seller, or investor, understanding the dynamics of Texas real estate is key to making informed decisions. Let’s take a closer look at the current state of the market, what’s been happening throughout the year, and what we can expect moving into 2025.

1. Market Overview: Steady Yet Slower Growth

Throughout 2024, Texas has maintained its status as one of the hottest housing markets in the country, though signs of slowing growth have become more evident. Historically, Texas has attracted homebuyers due to its strong economy, lower cost of living, and relatively affordable housing compared to states like California and New York. These factors, along with low unemployment and robust job growth, have kept demand high for housing.

However, as the year progresses, we’ve seen a few trends that suggest a shift in the market. Rising mortgage rates have undoubtedly had an impact, contributing to a more measured pace of sales. According to the Texas Real Estate Research Center at Texas A&M University, the median home price in Texas has continued to climb, but at a slower pace compared to the previous two years. The housing market in major metro areas like Dallas-Fort Worth, Austin, and Houston has cooled slightly as mortgage rates climbed above 7%—a level not seen in over a decade.

2. Price Trends: Moderation in Growth

Home prices across Texas saw significant increases in 2022 and 2023, but 2024 has been marked by more moderate price growth. For instance:

Dallas-Fort Worth: The market has remained competitive, but price appreciation has slowed as the impact of higher interest rates has dampened demand. In some areas, prices have leveled off or even declined slightly, especially for homes over $500,000.
Austin: Once the darling of Texas real estate, Austin's market has shown signs of stabilization. Home prices are still higher than pre-pandemic levels, but the rapid growth seen during the height of the tech boom has tempered. Many buyers are now finding themselves priced out of the city center, with more people exploring suburbs like Round Rock, Georgetown, and Pflugerville.
Houston: Houston continues to be a strong market, driven by its energy sector and the influx of people from other states. The city’s affordability compared to other major metros has kept demand steady, although we’re seeing a shift towards more suburban homebuying.

On the whole, while home prices are not experiencing the rapid increases of previous years, the Texas housing market is still relatively resilient compared to other parts of the country.

3. Inventory and Demand: A Tight Market Continues

One of the defining characteristics of the Texas housing market in 2024 has been low inventory levels. Homebuilders have struggled to keep up with demand due to supply chain issues, labor shortages, and rising construction costs. As a result, homes are still in short supply across much of the state, particularly in desirable urban and suburban areas.

This lack of inventory, paired with a steady demand from out-of-state buyers, continues to drive competition, even though price growth is moderating. Homes in desirable locations—especially those with good schools, proximity to employers, and easy access to amenities—are still selling quickly, sometimes with multiple offers.

That being said, some parts of Texas have seen more homes sit on the market for longer periods than in previous years, especially those priced above the median. This shift in the pace of sales may provide more opportunities for buyers who were previously sidelined by bidding wars and over-asking price sales.

4. Mortgage Rates and Affordability: A Key Factor

One of the most significant factors influencing the housing market in Texas has been the rise in mortgage rates. After a period of historically low rates during the COVID-19 pandemic, the Federal Reserve’s actions to combat inflation have led to a steep increase in mortgage rates, which has directly impacted homebuyer affordability.

The average 30-year fixed mortgage rate hit over 7% in 2024, creating challenges for both first-time homebuyers and those looking to move up. Many potential buyers have had to adjust their expectations, either by reducing their budgets, looking for smaller homes, or moving to more affordable areas. Additionally, some homeowners are opting to stay put rather than sell, locking in their low mortgage rates, and contributing to the ongoing inventory shortage.

While mortgage rates may remain elevated as the Fed continues its stance on inflation, many experts believe that a slowdown in rate hikes could bring some stability to the market in the near future, potentially leading to a slight rebound in buyer activity.

5. The Suburban Shift: More People Moving to the Suburbs

Another trend we've observed throughout 2024 is a continued shift toward suburban living, particularly in the outer areas of major cities. Cities like McKinney, Frisco, Prosper, and Plano in the Dallas-Fort Worth metroplex have seen rising interest from families and remote workers looking for more space at a relatively lower cost than in the urban core.

This suburban migration is not unique to DFW; similar trends are being seen in Austin, Houston, and San Antonio as well. The appeal of suburban communities with strong schools, family-friendly amenities, and easier access to nature has only grown, especially as remote work remains a fixture for many workers. Additionally, many suburbs offer newer homes and more modern amenities, which continue to attract buyers.

6. Looking Ahead: What to Expect in 2025

As we look ahead to 2025, a few key factors will shape the Texas housing market:

Mortgage Rates: While it’s difficult to predict exactly what will happen with interest rates, many experts expect mortgage rates to stabilize or even decline slightly, which could provide a boost to buyer activity.
New Construction: With continued population growth, particularly in suburban areas, we can expect to see more new home construction in Texas. However, builders will likely remain cautious due to the ongoing challenges of material costs and labor shortages.
Continued Demand: Texas remains a top destination for people relocating from other states, particularly from California, New York, and the Midwest. With no state income tax and a thriving job market, Texas will continue to attract new residents in 2025, which will help keep demand strong, especially in areas like Austin, Dallas-Fort Worth, and Houston.

7. Final Thoughts

While the Texas housing market is showing signs of moderation, it remains one of the most dynamic and resilient markets in the U.S. For buyers, it’s a market that requires patience, flexibility, and a clear understanding of your budget and priorities. For sellers, it’s still a great time to take advantage of relatively high home values, though pricing strategies may need to be adjusted to account for a more competitive environment.

As we head into 2025, expect the Texas housing market to continue to evolve—offering both challenges and opportunities for those looking to buy, sell, or invest in one of the most sought-after real estate markets in the country.

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