All measurements are calculated using seasonally adjusted data, and percentage changes are calculated month-over-month, unless stated otherwise.
Following months of rising inventory, the pressure of supply buildup is beginning to weigh more heavily on the Texas housing market, shifting conditions in favor of buyers even as affordability challenges continue to limit purchasing power. The market is showing signs of an unsustainable inventory, with sellers increasingly cutting prices to attract buyers. At the same time, record-high inventory levels are offering buyers a breadth of choice and negotiation leverage not seen in recent market cycles.
After three consecutive months of moderate year-over-year (YoY) declines, May’s home sales rebounded to match levels recorded in the same period last year. Forward-looking pending sales data now point to another upswing in June closing, signaling potential stabilization in transactional activity entering the peak spring cycle. However, year-to-date home sales (January through May) continue to lag 2024.
While weak demand steadily pushes inventory higher, rising seller activity (new listings) has further contributed to the supply surge. Hoping to capitalize on peak prices during the busiest spring buying season—and undeterred by the already elevated inventory—seller activity is outpacing demand by nearly two to one.
A balanced housing market depends on sustained buyer activity to maintain healthy inventory levels while keeping overall supply in check and property values stable. However, persistently high mortgage rates—averaging in the upper 6 percent to near 7 percent range—remain a significant obstacle to buyer affordability.
Home prices are softening and may have reached a plateau in May. In some markets, they are now beginning to decline. Statewide, May marked the first occurrence of YoY home price change nearing zero under the mounting pressure of inventory and intensifying seller price reductions. Early signs of decline are emerging in key markets such as Dallas-Fort Worth and San Antonio, while prices in Austin show no signs of bottoming out.
Looking ahead, continued price declines are anticipated as the market responds to the growing imbalance between elevated inventory levels and constrained buyer affordability. As the peak spring buying season winds down, intensifying seller incentives are expected to place additional downward pressure on home values, which, in turn, may attract demand from cautious buyers who have been waiting for more favorable prices.
June’s labor and inflation data underscore a resilient job market but also reveal inflationary pressure from tariff pass-through re-emerging since May, supporting expectations that near-term mortgage rates will remain stable, yet elevated, offering little broad relief to spring homebuyers.
Small Upturn In May Home Sales
Texas recorded 33,417 closed home sales in May, including both new and existing homes, accounting for 8.6 percent of all U.S. home sales that month. Year-to-date, the state’s share stands at 8.7 percent.
- May home sales stabilized YoY, recording 17 more transactions, an increase of just 0.1 percent but still an upturn from the moderate declines seen since February. Year to date, home sales were 2.1 percent below 2024.
- Nationally, seasonally unadjusted home sales were down 3.9 percent YoY, driven by declines in the West (9 percent) and the South (3.7 percent). Sales in the Midwest dropped 2 percent, while sales in the Northeast remained steady. Year to date, U.S. home sales were 2.8 percent below 2024.
- Texas’ overall median sales price was $340,000 in May, down from $345,000 YoY.
- Nationally, the median home price rose to $422,800, up from $417,200 YoY.
- Statewide pending home sales rose 6.8 percent YoY in May, marking the first positive May gain since 2021. Nationwide, pending homes sales were up 1.1 percent.
Inventory Pressure Pushes Deeper Price Cut
- As of May, the inventory is at 5.5 months’ supply, up from 4.3 months a year ago. Inventory last reached this level in September 2012, during the trough of the previous housing recession. In Texas, a relatively balanced inventory typically ranges from three to four months, with seasonal fluctuations within that band.
- The median days on market (DOM) in May reached 32 days—an increase of 23.1 percent from 26 days a year earlier. As the peak of the sales season, May and June traditionally record the shortest DOM.
- Days-to-close has stayed relatively unchanged, and it takes about 30 days for a pending sale to close. Mortgages lenders reported a high percentage of buyers seeking loan pre-approvals.
- In May, 65.7 percent of closed sales saw price cuts of $5,000 or more, with a median reduction of $11,500, up from $9,900 YoY, highlighting continued pricing pressure across the market.
Seller Activity (New Listings) Remains Strong, Outpacing Buyer Demand by Nearly Two to One
- In May, 61,366 new listings entered the market, up 1.8 percent month-over-month (MoM) and 12.5 percent YoY, after rising 14.8 and 16.9 percent in the prior two months.
- Year-to-date, new listings or seller activity are running 13.5 percent ahead of 2024’s pace, while home sales continue to lag.
- May typically marks the peak of new listing activity, aligning with the seasonal high in buyer demand during the spring homebuying surge.
- Recent new listing activity is running 21.5 percent ahead of the pace seen in the pre-pandemic market of 2019.
- The influx of new listings significantly outpaced sales, with the ratio of new listings to pending sales reaching 1.9—nearly double the level of buyer activity.
- In contrast, the relatively balanced pre-pandemic market typically saw a ratio of around 1.5, while the frenzied buying conditions of 2021 brought the ratio closer to 1 amid intense competition and bidding wars.
- A slowdown in new listings, a rebound in buyer demand, or both could help return the ratio to a more neutral level
Home Price Appreciation Stalls With Regional Price Declines
- In Austin, price declines have re-accelerated in the last three months, with the rate increasing from 2.1 percent in March to 3 percent in May. As of May, prices are 17.4 percent below the market peak set in May 2022.LOCAL
- Inventory pressure in Dallas has pushed prices lower for three consecutive months. In two-thirds of closed sales, sellers reduced asking prices by at least $5,000.
- Despite similar inventory buildup and pricing pressure, Houston’s home prices continue to rise YoY at a modest pace. In May, the average price reduction was $12,000.
- Prices in San Antonio declined 0.4 percent YoY in May, following a steeper 0.9 percent drop in April. The typical seller price cut reached $15,100, with a median sale price of $310,000.
Local Housing Market Indicators
Source: Texas Housing Insight | May 2025 | Texas Real Estate Research Center (By Yanling Mayer)
