An ongoing construction boom has combined with slowing demand to create a pileup of unsold homes in the once-booming Texas housing market, where prices are now starting to "correct" after years of overheating, experts told Newsweek.
In February, the latest data available on Redfin's website, inventory was up 16 percent year-over-year in the Lone Star State for a total of 151,335 homes for sale. But the number of homes sold in the same month was down 6.2 percent from a year earlier, to 21,892, as potential buyers continued to be discouraged by stubbornly high mortgage rates and rising housing costs.
Why It Matters
The rise of remote work during the pandemic led to an influx of out-of-state newcomers moving to Texas in the pursuit of sunny weather, affordable housing and lower taxes. This influx of people brought up demand at a time when the state was struggling with a historic lack of supply—same as the rest of the U.S.—with the added competition sending prices through the roof.
But now that the state has a lot more homes available, buyers are failing to show up. With a growing number of homes remaining unsold in the Texas market, the median sale price of a home was down 0.76 percent year-over-year in February, to $337,800—the lowest since January 2024. However, home prices in the once affordable Lone Star State remain now much higher than they were before the pandemic.
What To Know
For years following the Great Recession, the country built much fewer homes than needed. That was the situation when the pandemic housing boom began, thanks in part to a renewed focus on the domestic space and relatively low mortgage rates.
"Inventory in Texas, just as it did nationally, plummeted in the wake of the COVID-19 pandemic. The number of homes for sale in March 2022 was down over 60 percent from where it was in March 2019 for both the Texas and national markets," Realtor.com senior economist Joel Berner told Newsweek.
"Since 2022, though, Texas inventory has rebounded much faster. The number of active listings in Texas is now 20 percent higher than it was in March 2019, while nationally it's 20 percent lower."
Last year, Texas was the number one state in the country for new house permits, as it tried to keep up with its growing population, according to a Realtor.com report. It accounted for 15 percent of the U.S. total, despite accounting for 9 percent of the country's total population.
"New construction has ramped up in Texas, where 2024 recorded the highest annual growth of new housing starts in a decade," Christy Gessler, chairman of Texas REALTORS, told Newsweek.
It should be great news for buyers who have been facing a chronic supply shortage for years now. And yet, buyers remain on the sidelines of the market, bogged down by high mortgage rates and widespread uncertainty over the future of the U.S. economy.
Why Are So Many Homes Remaining Unsold?
For Nick Gerli, CEO of real estate platform Reventure App, the recent rise in inventory in Texas is mainly due to three factors.
First, a slowdown in inbound migration into the state, which refers to people permanently relocating within the same country. While Texas continues to attract many Americans wishing to relocate within the country, the pace of the state's population growth has slowed down after the end of the pandemic frenzy.
Second, homebuilders' delivery of a huge amount of homes onto the market—maybe more than it can absorb at this very moment. Mortgage rates are still above the 6.5 percent mark, and are not expected to come down below 6 percent for at least the next two years. Home prices, while declining, are still so much higher than what Texans were used to.
And this leads us to the third factor according to Gerli—the massive rise in home prices over the past few years, which has priced local Texans out of the market, shrinking demand.
"Prices rose very quickly in some markets between 2020 and 2023, and now we are seeing a slowing of price increases. More than a third of homes sold in Texas during the first quarter of 2025 were under $300,000," Gessler said. Part of this decrease in prices is due to the fact that the state has been building smaller, more affordable homes in recent years.
The combination of these three factors, Gerli said, "is leading to a big build-up in supply which is now reducing prices." According to the real estate analyst, prices in Texas are now "down by about -0.2 percent over the last year. But in markets like Austin, prices are down nearly 20 percent from the peak in mid-2022."
Despite ongoing affordability issues, the increase of available properties is "welcome as excited buyers now have more options," Gessler said. "With the increase in the number of available homes, there may be more opportunities for first time buyers to enter the market. Even so, there is competition from buyers who can make all cash offers," she added.
What Does This Mean for Texas?
For Gerli, the Texas boom "is over" and the state will now "enter a multi-year period where Texas' housing market struggles."
The Lone Star State went through a similar boom and bust in the 1980s, Gerli said. "Don't be surprised if price growth declines for several years, and then flatlines for several years after that," he told Newsweek. "Once the state's affordability advantage returns, it will again see buoyant demand due to its strong economy. However, that could take four, five years to play out."
Other experts are more optimistic about the situation in the Lone Star State. Berner said that while the pace of home sales has slowed in Texas since 2022, that's also true at a national level—but the Lone Star State is faring much better because of its big population.
Gessler said that Texas is continuing to see population growth and a strong desire for investment in homeownership—so much so that even growing supply is not able to alleviate the current affordability crisis in the state.
"Increases in inventory and policies relating to property tax relief and affordability are helpful, but we still have a long way to go to meet the demand," she said.
Berner agreed that Texas, despite growing supply, "is not out of the woods when it comes to addressing the housing shortage." These recent improvements "come after decades of under-building that left it in a serious deficit to begin with. However, Texas is less affected now by the supply gap than many other states and the nation at large," he said.
The Realtor.com expert, unlike Gerli, does not expect prices in Texas to correct for long. "When the market cycles back to a higher level of activity, which may very well result from a drop in mortgage rates, home values and listing prices will pick back up," he said.
"A well-supplied market is a good problem to have, as Texas struggles with housing affordability already. If Texas continues to build lots of homes, it will be able to meet accelerated demand when the time comes."
Shae Cottar, chair of the Houston Association of Realtors (HAR), told Newsweek that once mortgage rates begin to fall, they anticipate a resurgence in housing demand.
"Lower mortgage rates generally make homeownership more accessible, prompting more buyers to enter the market. However, Texas' unique economic strength and its ability to attract new residents and businesses will likely help maintain a balanced market," Cottar said. "Even if demand surges again, the groundwork laid by builders and the state's resilient economy should help mitigate any severe shortages."
