Fever breaks in Texas as home sales, prices decline

Home sales and new home construction in Texas tumbled last year as interest rates dampened activity across the state’s housing markets, according to new data from the Texas A&M Real Estate Research Center. 

Home sales fell by more than 10 percent last year compared to 2021. Even though construction slowed from its pandemic high, overall housing supply returned to pre-pandemic levels.

The researchers cite interest rate hikes as the key factor behind such drastic changes. While rising rates first hurt the market for affordable homes, they soon pushed higher-end buyers to the sidelines too.

“The housing market took quite a spill last year, but if you look with a broader lens, it appears to be getting back to where things were,” said Joshua Roberson, the paper’s lead author. 

Houston builders accounted for 30 percent of starts, while their counterparts in Dallas-Fort Worth nabbed 27 percent of the permits, and Austin developers took 13 percent.

Authorities issued 170,557 permits to build single-family homes last year, an 8 percent decline from 2021. Construction usually slows in the winter, but even by those standards, activity fell off: Monthly single-family starts fell to 10,203 units in December, a 34 percent decline from December 2021. 

As construction slowed, so did demand. In Austin, where monthly starts dipped below 1,000 units for the first time since 2016, homes spent an average of 67 days on the market this year. 

In Austin, homes spent an average of 67 days on the market last year, up from just 19 days in 2021. It’s a welcome reprieve for buyers, who spent much of 2021 contending over listings that were snapped up as soon as they went public. “The amount of pressure on housing was extreme to say the least,” Roberson said.  

The current numbers are much more in line with pre-pandemic norms, when the statewide average waiting period was around 59 days.

The median home price statewide peaked in May at $349,900 and has been falling ever since. Still, it remains higher than it was a year ago. The median sale price in Austin has fallen more than $78,000 from its peak to $463,900. The capital was the only city with an annual decrease in median price — Dallas, Houston and San Antonio saw between 4 and 6 percent growth. 

Sale volumes and prices declined in all three major metro areas between November and December. But in San Antonio-New Braunfels, where many have moved for cheaper land as Austin and San Antonio edge closer to becoming a metroplex, the median home price actually rose slightly in that span. 

“I remember growing up going out to my uncle’s farm on I-35,” Roberson said. “80 acres, and there were fields everywhere. Now, to their begrudgement, that’s not the case.”