Texas House Prices Feel the Sting

While home prices are rising across the country, Texas metro areas like San Antonio and Austin, once the poster child for the pandemic's booming housing market, are still experiencing modest declines, according to the latest data from Zillow.

National home prices were up by 0.3 percent in February from a month earlier, and 4.2 percent higher year on year, but in San Antonio they were mostly unchanged between January and February, and they were down by 2.5 percent compared to a year before. In the former pandemic boomtown of Austin, home prices were up 0.3 percent in February month over month, but still down by 5.1 percent year over year.

The latest data, updated to February 29, show an even steeper drop compared to last year's numbers. In San Antonio, the average value of a home was $253,762, down 2.8 percent. In Austin, it was $533,719, down 6.2 percent.

The drop in home prices was even more striking in these metro areas compared to their peak in 2022. From then, San Antonio home prices have tumbled by 7.5 percent, while in Austin they are down by a staggering 20.4 percent.

San Antonio, Austin and New Orleans, Louisiana, were the only metro areas out of a list of 50 of the U.S.'s largest metropolitan housing markets analyzed by Zillow where home prices went down in February. In New Orleans, prices fell 0.1 percent in February, month over month, and they were down by 7.5 percent year on year.

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The three metro areas are still suffering the impact of a price correction that began in the U.S. in late summer 2022, when demand began to slide following the rise in mortgage rates due to the Federal Reserve's aggressive rate-hiking campaign to control surging inflation. While this correction seemed to find an end in spring 2023 across the country, as pent-up demand and low inventory kept prices from plummeting, Austin and New Orleans in particular have continued seeing drops.

Home prices are currently declining across Texas as the state has built the highest number of new homes in the country, together with Florida. In the Lone Star State, the average home value was $298,624 as of February 29, according to Zillow, down 0.1 percent compared to a year before—though sales haven't risen to match this decline, according to Texas REALTORS' data.

"While rising inventory in most markets should offer buyers more options in 2024, fluctuations in mortgage rates continue to affect buyers' decisions to invest in real estate. We're hoping to see lower interest rates by the end of this year," Jef Conn, chairman of Texas REALTORS, previously said in a statement to Newsweek.

"Higher mortgage rates deterred some buyers in 2023, but even so, the overall median price of homes in Texas saw only a slight decline, 1.4 percent, compared to 2022, with the majority of metro areas seeing slight median price increases. Real estate is very localized, so certain markets are experiencing very different trends than Texas as a whole is seeing. Realtors can help buyers make sense of the state of their specific market and guide them through the best decisions for their situation."

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While San Antonio and Austin showed significant drops from February 2023, other metro areas in Texas have seen prices going up. In Dallas, home prices climbed 0.5 percent in February, month over month, and 1.3 percent year on year. In Houston, they've gone up by 0.3 percent in the month and 1.2 percent year over year. Compared to their peak in 2022, prices in these metro areas were down, respectively, by 5.7 percent and 3.8 percent.