As of August 2026, the Texas housing market is experiencing a marked slowdown, with home sales plummeting by nearly 25% year-over-year, a direct consequence of rising mortgage rates that have reached a 20-year high.
According to data released by the Texas Real Estate Research Center, the average interest rate for a 30-year fixed mortgage now stands at approximately 7.3%, up from just 3.2% in early 2022. This dramatic increase has deterred potential buyers, causing many to postpone their home purchases.
In Houston, home sales dropped by 22% in the second quarter of 2026 compared to the previous year, while Dallas reported a 27% decline. “We are witnessing a fundamental shift in buyer behavior,” said Tom McCarthy, a senior analyst at the Texas Real Estate Center. “The affordability crisis is real, and many families are choosing to rent rather than buy.”
Despite the slowdown in sales, home prices have remained relatively resilient, with the median price in Austin climbing to $525,000, a 5% increase from last year. This is attributed to limited inventory and a still-robust demand among high-income buyers.
However, industry experts anticipate that prices may plateau as the economic landscape shifts. “We are likely to see a more balanced market as the year progresses,” noted Jessica Nguyen, a realtor based in San Antonio. “Buyers are becoming more cautious, and sellers may need to adjust their expectations.”
Additionally, the commercial real estate sector in cities like Fort Worth is grappling with similar challenges, as rising construction costs and interest rates create barriers for new developments. The Dallas-Fort Worth area has seen several high-profile projects delayed or scaled back.
As Texas navigates this treacherous economic terrain, both buyers and sellers are urged to proceed with caution and informed decision-making. The coming months will be critical in determining the long-term trajectory of the state’s real estate landscape.