Texas housing markets are sagging. Data suggests it might get worse

With its low taxes, affordable housing and warm weather, Texas has been a hot destination for households in high-cost markets since the COVID struck in 2020.

But the housing markets in the state’s four major metropolitan areas show inventory continues to grow by large percentages year over year, and new listings are spiking as they usually do this time of year.

While homebuyers have more options, they’re not yet pulling the trigger on a new home at a pace matches inventory, as sales haven’t followed despite prices generally remaining constant. 

Rising supply without a response in demand suggests that Texas markets could get worse before they get better.

Texas is already experiencing downward press on prices, according to data from Altos. In March, single-family homes sold for less than the asking price by 10.5% in San Antonio, 10.1% in Dallas and 4.4% in Houston. Those gaps are the most of the 50 markets HousingWire analyzed.

There are a number of macroeconomic conditions that could explain why this is happening. The obvious one is mortgage rates, which have jumped in the wake of President Donald Trump’s new global tariff policies.

Anxiety around tariffs have pushed the stock market, the dollar and the bond market down sharply (fears that Fed Chair Jerome Powell will be fired hasn’t helped). As a result, the mortgage rate on a 30-year fixed conforming mortgage has risen from 6.69% on April 11 to 6.98% as of Tuesday.

There’s also the matter of how the uncertainty around tariffs and the economy is impacting the behavior of buyers and sellers. 

The University of Michigan Consumer Sentiment Index for April fell considerably on expectations of rising inflation because of the tariffs. A survey in March from John Burns Research & Consulting showed the share of respondents saying they’re “very pessimistic” about the economy jumped by 10 percentage points. 

In Texas markets, new listings have jumped while sales haven’t. While this may simply be a temporary lag on the part of buyers, economic uncertainty impacts buyers and sellers in different ways.

Sellers may want to get ahead of any negative changes in the economy by listing their home. Buyers might want to wait a bit to see how things shake out with tariffs and inflation. If this is a widespread dynamic that holds through the spring, it will slow the home sales market.

This dynamic is present in all four major Texas markets. In the fall, home sales picked up year over year in Houston as new listings rose. But since then, home sales have stopped growing while new listings are up by 16.8% year over year, and that number appears primed to rise.

It’s the same in Dallas. The pace of sales growth began to fall in the winter and has since turned negative. This is despite the growth in new listings spiking and inventory still rising by 40% or more year over year.

San Antonio is an interesting case because it appears the market has slowed on all fronts. Home sales busted out of the 2022 slump in a big way the following year, rising by as much as 115% year over year. But mere months later that number turned negative and is presently flat. 

At the same time, new listings and overall inventory aren’t growing as much as they were, suggesting a market that’s settling into the general dynamic after years of volatility.

Austin has been one of the most volatile markets since the pandemic, having become a hot spot for people migrating from California. Heading into 2025, year-over-year growth in sales, inventory and new listings began to fall.

So far in 2025, sales have turned negative year over year while inventory continues to rise by more than 40%, and growth in new listings has spiked from negative territory in February to up by 12.8% now.

The current metrics in these markets suggest that supply is beginning to dramatically outpace demand, which could push what’s been flat prices into negative territory. However, the full impact of Trump’s economic policies on local market conditions likely won’t be entirely clear in the data for another few months.