Where Home Prices Are Falling Fast in Texas — What Buyers Should Know

Home Prices Are Dropping Fast in Key Texas Cities

Texas has been one of the hottest real estate markets in the country for years. But in 2025, the landscape is shifting. Several major metro areas in Texas are now experiencing a noticeable decline in home prices. While this may cause concern for sellers, it creates opportunity for homebuyers—especially those working with an experienced mortgage broker like LBC Capital.

Austin: Leading the Decline

Austin is seeing the fastest home price drops among all U.S. cities. In July 2025, the median list price fell by 4.9% year-over-year to about $510,950. Over 26% more homes are on the market compared to a year ago, and nearly one-third of listings are seeing price reductions.

Homes are also staying on the market longer—an average of 65.5 days, up from 57.5 days in 2024. This gives buyers in Austin a real advantage. With LBC Capital’s guidance, buyers can negotiate more favorable terms, including lower purchase prices or closing cost credits.

Houston: Supply Is Growing, Prices Are Falling

Houston’s housing market is cooling. The median home price dropped 2.8% year-over-year to approximately $369,000. A growing number of listings are staying active longer, indicating a shift in power toward buyers.

While Houston’s job market remains strong, rising property taxes and insurance premiums are pushing many buyers to the sidelines. For those ready to make a move, this shift represents a prime opportunity. LBC Capital helps clients lock in competitive loan terms even as prices soften.

Other Declining Markets Across Texas

Home price declines aren’t limited to the big cities. According to recent forecasts, 31 Texas metro areas are expected to see falling prices through late 2025. Some smaller towns are seeing sharp corrections.

• Pecos is projected to decline by 9.5% by October.
• Big Spring may see an 8.1% drop.
• Sweetwater is forecasted to fall by 6.9%.

Even mid-size cities like Beaumont and San Antonio are projected to dip slightly, by 0.7% and 0.5% respectively. While these declines may seem modest, they present a chance for buyers to get in at more reasonable price points.

What’s Causing the Shift in Texas Real Estate?

Rising Inventory from New Construction

Texas has seen a building boom over the past few years. In cities like Dallas, Austin, and Houston, thousands of new homes have come to market. That influx of supply has finally caught up with demand.

In Dallas, listings jumped more than 50% year-over-year. Houston saw a 35% increase. Austin experienced a 30% gain in inventory. These increases have outpaced buyer demand, pushing prices down and giving buyers the advantage.

Higher Mortgage Rates

The average 30-year fixed mortgage rate in Texas has hovered between 6.5% and 7% throughout 2025. These higher borrowing costs reduce what buyers can afford and make monthly payments significantly more expensive.

As a result, more potential buyers are waiting on the sidelines, reducing competition and driving down prices. LBC Capital helps clients navigate these higher rates by identifying the best loan programs tailored to their budget and long-term goals.

Climbing Insurance Costs and Property Taxes

Texas homeowners are facing steep increases in insurance premiums, especially in flood-prone and coastal areas. These added costs are driving some would-be buyers away, especially in regions with recurring weather risks.

At the same time, high property taxes in Texas continue to put pressure on affordability. Together, these factors are making homes less attractive, especially in areas where prices had surged.

Waning Migration and Slower Demand

During the pandemic, Texas experienced a major influx of out-of-state buyers. That demand drove prices higher, particularly in cities like Austin. But in 2025, that trend has slowed. As population growth tapers and more homes hit the market, sellers no longer hold the same negotiating power.

This slowdown in demand is one of the key reasons LBC Capital is seeing more clients find success in negotiating better deals in formerly hot markets.

What Buyers Should Know Right Now

There’s Real Negotiation Power in Today’s Market

With many sellers reducing their asking prices and homes sitting longer on the market, buyers now hold more leverage than at any point in recent years. This is especially true in markets like Austin, where price drops and high inventory levels create ideal conditions for buyers.

LBC Capital helps clients take advantage of these conditions by positioning their offers strategically. From requesting repairs to negotiating seller concessions, our team ensures buyers make the most of today’s market dynamics.

Timing Is Everything

The most significant price drops began in early 2025 and have continued through summer. In July, Austin experienced a 6% decline from its 2024 peak. Many experts believe prices will continue to fall or at least stabilize into the fall and early winter.

That means the next few months could be the most favorable time for buyers looking to purchase in Texas. LBC Capital closely monitors local market trends to help clients time their purchase effectively.

Not Every Market Is Declining

While some Texas markets are experiencing significant price drops, others are holding steady or even seeing modest growth. Dallas, El Paso, and San Antonio are expected to remain relatively stable throughout the rest of 2025.

LBC Capital helps buyers explore markets with strong fundamentals—steady employment, good schools, and long-term growth potential—even if prices haven’t dropped significantly.

Benefits of Buying During a Price Decline

More Homes to Choose From

Buyers now have more options. With listings up significantly across major metros, it’s easier to find a property that fits both lifestyle and budget. LBC Capital works with buyers to ensure financing aligns with their needs, whether they’re purchasing a starter home or upgrading.

Better Terms and Lower Risk of Bidding Wars

Unlike the competitive frenzy of previous years, today’s market allows for more thoughtful offers. Buyers are less likely to face bidding wars, and sellers are more willing to negotiate. LBC Capital guides clients through the offer process to secure favorable pricing and terms.

Long-Term Investment Potential

Buying when prices are down may mean locking in long-term value. Texas remains a growth state, and while some areas are correcting, long-term demand is expected to return. Buyers working with LBC Capital can benefit from today’s lower entry points while building equity over time.

Final Thoughts

Home prices are falling across key markets in Texas, offering a window of opportunity for buyers. Whether you’re targeting Austin, Houston, or one of the many smaller metros seeing a pullback, conditions in 2025 are more favorable than they’ve been in years.

LBC Capital helps buyers seize this moment by offering expert guidance, personalized financing, and a clear path to homeownership. With rates still elevated and inventory rising, the time to act is now—before competition returns and prices stabilize.