Texas Housing Market: Price, Trends, Predictions 2023 (2024)

The Texas housing market is certainly a fascinating one to explore in 2023. Using several statistics, we explore the Texas houisng market and where it's heading. The lack of inventory continues to inflate Texas housing prices for now, but many analysts predict that the rate of appreciation will slow down as compared to the last two years. Some of the fastest-growing real estate markets in 2022 are in extremely desirable sections of Texas, particularly in the suburbs of major metropolitan cities.

These communities often have great educational systems and provide more value for money. They are ideal for millennials seeking a place to raise a family. The suburbs of Dallas and Austin are by far the most popular areas to purchase in Texas. Real estate brokers also report increased sales of lake properties and ranches as individuals seek ways to get away from congested cities.

Texas has approximately 1,700 cities with populations ranging from 2.3 million to less than 100 people. According to PwC and the Urban Land Institute's Emerging Trends in Real Estate 2022 research, Texas has four of the top twelve markets with the highest house-building prospects.

According to Zillow, the typical home value in Texas has climbed by 6.9% over the last twelve months. It stands at $289,255 (ZHVI). People from all over the country are flocking to Texas to live, work, and invest in the Texas real estate market.

The FHFA House Price Index (FHFA HPI®) is the nation’s only collection of public, freely available house price indexes that measure changes in single-family home values based on data from all 50 states and over 400 American cities that extend back to the mid-1970s. At the national level, house prices rose nationwide in January, up 0.2 percent from December. House prices rose 5.3 percent from January 2022 to January 2023. The previously reported 0.1 percent price decline in December 2022 remained unchanged.

Four-Quarter Appreciation in Texas (as of 2022 Q4)

• One-Quarter Appreciation: 0.5%
• Four-Quarter Appreciation: 9.7%
• Five-Year Appreciation: 58.7%
• Appreciation since 1991: 332.1%

According to the most recent report from the Texas Real Estate Research Center at Texas A&M University,the Texas housing market has been showing signs of stabilizing, with only minor changes in recent months compared to the major swings experienced during the pandemic. January 2023 was the slowest start since January 2017.

Texas single-family construction starts plummeted since March 2022 but started 2023 with a positive month in January. Houston and Dallas continue to account for more than half of the state's total, while Austin and San Antonio had their construction values nearly cut in half in the first month of 2023. Active listings have more than tripled from a year ago in Austin.

Sales activity has picked up, and the Texas' average days on market continued to climb but at a slower pace of 54 days. The state's median home prices started the new year with a strengthened housing market, and all metros posted positive price growth except for San Antonio.

Texas Housing Supply

Single-family construction permits had been sliding down in demand since March 2022. January 2023's permit level fell 6.9 percent MOM to 8,897 permits. The other two months during the past three years that monthly permits dipped below 9,000 were during the initial pandemic shock in April and May 2020. Construction permits fell in all major metros except Austin.

Housing demand in Houston (2,842 permits) was mostly flat, and Dallas (2,249 permits) dropped more than 15 percent MOM. Austin's monthly construction demand (1,082 permits) rebounded 10 percent, issuing twice as many permits as San Antonio's (481 permits).

Texas single-family construction starts have likewise plummeted since March 2022 but started 2023 with a positive month in January with 9,090 units. Although construction starts rebounded in every major metro, the January metric was the lowest level reported in Texas since 2016, suggesting a meek outlook for the housing industry.

The state's total single-family starts value diminished from $3.8 billion in January 2022 to $2.2 billion in 2023. Houston and Dallas continue to account for more than half of the state's total, coming in at 27.5 percent and 26.1 percent, respectively. Further pressing the point home that housing activity is down from the previous year, Austin and San Antonio had their construction values nearly cut in half in the first month of 2023.

Texas Housing Demand

Total home sales inched up 3.4 percent MOM to a seasonally adjusted rate of 27,475 sales. This uptick marked the largest MOM jump since the second half of 2022. Sales in Austin and Houston rebounded greatly, with the former metro surpassing San Antonio's sales volume and the latter surpassing Dallas' (Table 1). While the housing market opened robustly in 2023, Texas' sales still diminished by over 20 percent compared with last year's January metric.

Sales grew across all price cohorts. While homes below $300K still make up 40 percent of the market, this sector's sales volume rebounded at least at 0.5 percent MOM. The remaining price cohorts ascended moderately at a low-single-digit growth, but homes above $750K grew at an impressive rate of 21.6 percent MOM, accounting for almost 9 percent of the market.

With sales activity picking up, the Texas average days on market (DOM) continued to climb but at a slower pace of 54 days. Compared with the five-year average of 59 days before 2020, this is still converging to historic norms, and it is tilting toward a weaker market that favors buyers. Quadrupling since March 2022, Austin posted a first dip in DOM, balancing at 61 days.

Compared with a surge in supply during the pandemic, Texas' active listings have more than tripled from a year ago in Austin. The inventory is up 240 percent, providing 1.6 months of inventory. Houston's inventory also surged by 140 percent, providing 1.7 months of inventory, while Dallas and San Antonio both provided around 1.9 months of inventory. Statewide, inventory is up 140 percent YoY and provides 1.8 months of inventory.

The state's median home price started the new year with a strengthened housing market, increasing 7.4 percent YoY to $335,000. All major metros posted positive price growth except for San Antonio, which had a slight decline of 0.7 percent YoY. Austin and Houston had the most significant YoY price growth, both up by more than 12 percent. Meanwhile, Dallas' median home price increased 8.8 percent YoY.

In conclusion, the Texas housing market has stabilized in recent months, with supply and demand showing signs of recovery. Single-family construction permits and starts have fallen since March 2022, but January 2023 had a positive month, suggesting a meek outlook for the housing industry. Sales activity has picked up, with all major metros posting positive price growth except for San Antonio. While the market is still favoring buyers, the average days on market are converging to historic norms, and the state's median home price has strengthened, indicating a positive outlook for the future.

Texas Housing Market Predictions 2023 – 2024

Texas has had some of the strongest housing appreciation rates in the country over the past decade. Over the past decade, Texas housing prices have risen 125.74 percent, which equates to an annual home appreciation rate of 8.48 percent, according to the data collected by NeighborhoodScout. If you are a house buyer or real estate investor, Texas has been one of the finest long-term real estate investments in the United States over the past decade.

According to Zillow's data, the Texas MSA housing market is expected to experience varying trends from 2023 to 2024. While some areas may experience an increase in housing prices, others may experience a decline.

In Dallas, TX, housing prices are expected to decrease by 0.1% as of April 2023, followed by a further decline of 0.3% in June 2023, but are projected to increase by 0.7% by March 2024. Houston, TX, on the other hand, is also expected to see a decline in housing prices, with a decrease of 0.1% in April 2023, a further decline of 0.5% in June 2023, and a minor increase of 0.1% by March 2024.

San Antonio, TX, is projected to experience a stable housing market, with no change in housing prices in April 2023, a decrease of 0.2% in June 2023, and a projected increase of 1% by March 2024. In Austin, TX, housing prices are expected to decline by 0.7% in April 2023, followed by a further decline of 1.7% in June 2023, and a minor recovery with a decrease of 0.4% by March 2024.

The McAllen, TX housing market is expected to experience a significant increase, with housing prices projected to increase by 0.4% in April 2023, followed by a further increase of 0.5% in June 2023 and a substantial increase of 3% by March 2024. Similarly, El Paso, TX, is projected to experience an increase in housing prices, with a projected increase of 0.4% in April 2023, a further increase of 0.8% in June 2023, and a substantial increase of 2.5% by March 2024.

Other areas, such as Killeen, TX, Lubbock, TX, Tyler, TX, Laredo, TX, San Angelo, TX, and Del Rio, TX, are also expected to experience an increase in housing prices from 2023 to 2024, with projected increases ranging from 0.3% to 3.8%. However, areas such as Beaumont, TX, Odessa, TX, and Alice, TX, are projected to experience a decline in housing prices, with projected decreases ranging from 1.5% to 3.5%.

Here's a table showing the areas in Texas where home prices are expected to rise and fall between 2023 and 2024, based on Zillow's data:

In summary, the Texas MSA housing market is projected to experience a mix of both positive and negative trends from 2023 to 2024, with some areas experiencing an increase in housing prices while others may experience a decline. It's essential to keep an eye on the local housing market trends to make informed decisions as a buyer or seller in Texas.

Although house sales have slowed in Texas, this is not always an indication of demand but rather of supply. Numerous analysts believe that the number of homes sold in Texas in 2021 and 2022 could have been higher if there had been a greater supply of homes for sale. As newly constructed homes enter the market, this might increase overall sales.

If you want to sell your property in 2023, you are in an advantageous position. While Texas home prices are not predicted to increase as quickly or as sharply as they did in 2021 and early 2022, when mortgage rates were low, buyer demand remains robust and is unlikely to diminish.Overall, the Texas housing market will likely continue robust, although not to the same extent as in 2021.

Texas Employment Situation

Home sales are typically intimately related to the health of an economy and increase and decrease in tandem with economic activity. As economies decline, the money supply becomes more constrained. As it gets more difficult to obtain money, fewer house buyers enter the market. With fewer buyers accessible due to stricter credit criteria, inventories of houses rise or take longer to sell. Price decreases when there is more product supply and less demand for it.

As recession fears persist, inflationary pressures and uncertainty show that the outlook for the Texas economy in 2023 is mixed. The Texas economy is experiencing mixed fortunes, with the inflation rate decreasing but still high at 6.5%, a drop in home sales, and slow job growth, though the unemployment rate is down to 3.9%.

The goods-producing sector created 8,300 jobs, led by mining, logging, and construction, which accounted for 2,800 new employees, and manufacturing, which added 5,500 workers to the payroll. Private employees' average nominal earnings increased to $30.53, but inflation continued to offset the nominal wage increases, resulting in a decrease in real wages. Inflation reduction measures are expected to ease in 2023, but recession fears continue to be a concern. Despite stubborn inflation growth and overall economic uncertainty, the Texas economy has remained robust.

Energy Sector

The energy sector is one of the main drivers of the Texas economy, and it has experienced significant volatility over the past few years. The price of crude oil has been volatile, which has had a significant impact on the energy sector's overall health. While the price of crude oil has decreased in recent months, it remains higher than it was in 2021, which has helped to stabilize the industry. Additionally, Texas is the leading producer of natural gas in the country, and the price of natural gas has also been volatile in recent months. However, the price has decreased since its peak in August, which has helped to mitigate some of the negative effects on the industry.

Housing Market

The housing market in Texas has been relatively stable over the past few years, but there have been some recent signs of weakness. Total home sales volume has decreased significantly, which is likely due to rising interest rates and overall economic uncertainty. While the housing market in Texas remains relatively strong compared to other states, it is worth monitoring for signs of further weakness.

Employment

Texas has been one of the fastest-growing states in terms of job growth over the past few years, and this trend has continued in recent months. However, there are signs that job growth may be slowing, which could be a cause for concern. Additionally, while the unemployment rate has decreased, the number of Texans filing initial unemployment claims has increased significantly, which could be a sign of weakness in the labor market.

Overall Economic Outlook

The overall economic outlook for Texas remains positive, but some potential headwinds could cause problems. Inflation continues to be a concern, and while it is expected to moderate in 2023, it could still cause problems for consumers and businesses alike. Additionally, the potential for a recession is a concern, as there are signs that the economy may be slowing.

Conclusion

In conclusion, the Texas economy is currently facing some challenges, but it remains relatively strong compared to other states. The energy sector continues to be a major driver of growth, but it is subject to volatility. The housing market is showing signs of weakness, but it remains relatively stable. Employment growth has been strong, but there are signs that it may be slowing. Overall, the economic outlook for Texas remains positive, but some potential headwinds could cause problems in the future.

Top 10 Places to Buy a House in Texas

According to Niche.com, these are the top 10 areas to buy a home based on home valuations, property taxes, homeownership rates, housing prices, and real estate trends. The ranking is based on statistics from the United States Census Bureau, the FBI, and other sources. Cottonwood Creek South is the best place in Texas to buy a house.

1. Cottonwood Creek South, a neighborhood in Richardson, TX
2. Arapaho, a neighborhood in Richardson, TX
3. Lakeside City, TX
4. Fulshear, a town in Fort Bend County, TX
5. Canyon Creek South, a neighborhood in Richardson, TX
6. Heights Park, a neighborhood in Richardson, TX
7. Shady Hollow, a suburb of Austin, TX
8. Red Lick, Bowie County, TX
9. Woodway, a suburb of Waco, TX
10. Timberbrook, a neighborhood in Plano, TX

Top 10 Texas Cities Having Highest Real Estate Appreciation Rates Since 2000

According to Neighborhoodscout.com, these are the top ten cities in Texas that have had the highest real estate appreciation since the year 2000.

1. Westworth Village
2. Gustine
3. Balmorhea
4. Garden City
5. Mico
6. Runge
7. Granger
8. Encinal
9. Falls City
10. Wingate

Sources:

• https://www.zillow.com/tx/home-values/
• https://www.redfin.com/state/Texas/housing-market
• https://www.recenter.tamu.edu/articles/technical-report/Texas-Housing-Insight
• https://www.neighborhoodscout.com/tx/real-estate
• https://www.niche.com/places-to-live/search/best-places-to-buy-a-house/s/texas/
• https://www.fhfa.gov/DataTools/Tools/Pages/Four-Quarter-Heat-Map.aspx
• https://www.fhfa.gov/AboutUs/reportsplans/Pages/Fannie-Mae-Freddie-Mac-Reports.aspx
• https://www.recenter.tamu.edu/articles/technical-report/outlook-for-the-texas-economy