Housing affordability in Texas has improved due to falling home prices and mortgage rates, setting buyers up for success in 2026.
Here are five things to know right up front:
- Texas home prices declined by 2.4% over the past year (as of Sept. 2025).
- Prices will likely fall a bit further before finding a bottom.
- Mortgage rates recently fell to their lowest level since October 2024.
- These two trends have created a more affordable housing market.
- Buyers also have more bargaining power and properties to choose from.
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Alert: Texas Home Prices Are Still Dropping
Heads up: Home buyers should know that house prices in many Texas cities are currently dropping and might have further to fall.
It usually doesn’t make sense to buy a house when prices are falling. Depreciating values can leave buyers “underwater” on their mortgages and unable to build equity as fast as they’d like.
While no one can predict future real estate trends with complete accuracy, we believe Texas home prices will “bottom out” in late 2025 and begin inching upward in early 2026.
The big caveat: Home price trends can vary significantly from one city to the next. So be sure to research your local market before making decisions.
Why 2026 Could Be a Good Year for Buyers
We touched on some of the reasons why 2026 could be a good time to buy a house in the Lone Star State. Now let’s dig deeper by exploring them one at a time.
1. Home prices are (probably) about to hit bottom.
Home prices across much of Texas have declined a bit over the past year, improving affordability for buyers at a time when it’s much needed.
According to a September 2025 statement from Zillow: “The average Texas home value is $304,005, down 2.4% over the past year.”
Some forecasters believe prices will stabilize later this year or early next, creating a window of opportunity for bargain-seeking home buyers.
When people say home prices are “reaching the bottom,” they’re referring to the lowest point in a housing market cycle. Housing markets don’t move in a straight line—they rise for a while, then cool off, sometimes fall, and eventually recover again.
When prices are falling (as they currently are in Texas), the “bottom” is the point where they stop dropping and level out before starting to climb again.
For buyers, the bottom of the cycle can be an attractive time to purchase because homes are usually more affordable than they’ve been in years.
But it’s not always easy to spot the bottom while you’re in it—you usually only know for sure once prices have already started rising again.
The takeaway: If the Texas housing market bottoms out later this year, it could make 2026 an even better time to buy a home.
2. Mortgage rates have eased, improving affordability.
Like home prices, mortgage rates have also been trending downward lately, improving the affordability picture for home buyers in Texas and nationwide.
During the first week of September 2025, the average rate for a 30-year fixed mortgage dropped to 6.5%—its lowest level since October 2024.
According to a recent statement from Freddie Mac: “Mortgage rates continue to trend down, increasing optimism for new buyers and current owners alike.”
Economists expect rates to hover in their current range through the rest of this year.
For example, Fannie Mae predicted that average 30-year mortgage rates will end 2025 at 6.5%. They also expect rates to ease further in 2026, possibly falling to 6.1% by the end of 2026.
The takeaway: Mortgage rates dropped over the past year and are not expected to spike again anytime soon. This could give Texas home buyers more purchasing power in 2026.
3. Inventory has risen, giving home buyers more choices.
According to data collected by Redfin, Texas currently has about a 5-month supply of homes for sale. That’s more inventory than last year, and miles above the record lows seen during the pandemic.
For comparison, “months of supply” for the U.S. as a whole is currently at around 3.5 months.
This shows that Texas home buyers have more properties to choose from compared to previous years, and more supply than most other U.S. states.
While inventory has risen in all of Texas’s major metros, the Austin area leads the way when it comes to the number of homes for sale. Austin is basically a buyer’s paradise right now.
The takeaway: In 2026, Texas home buyers will have more properties to consider compared to previous years. This increases the chance of finding a suitable property within budget.
4. Homes are taking longer to sell, giving buyers an edge.
Last month, homes listed for sale across Texas spent a median of 55 days on the market before going under contract. That was well above the national median of 43 days.
This metric has trended upward over the past year. This means the Texas real estate market has slowed down and homes are now taking longer to sell.
A slower market gives buyers more leverage. Sellers become more willing to negotiate on price, offer concessions like covering closing costs, or agree to repairs—things they might not do in a hotter market.
This is what economists refer to as “buyer-friendly” market conditions.
We expect these conditions to continue through the rest of this year and into next, adding to the reasons why 2026 could be a good year for Texas home buyers.
The takeaway: Supply gains have given house hunters more time to shop and more power at the bargaining table, increasing the chance for success.
5. Sellers are more willing to negotiate over price.
Fewer homes in Texas are selling above the list price, compared to previous years. In summer 2025, for example, only about 12% of for-sale properties end up selling for more than the asking price.
In a hot market where sellers have a big advantage, we often see 50% or more of homes selling above asking price—and sometimes up to 70%.
But in Texas, most properties are currently selling at or below the list, with a higher number of sellers reducing their prices.
This bodes well for buyers planning a purchase later this year or during the first quarter of 2026. It shows that the balance of power has shifted away from sellers and toward buyers.
With fewer homes getting bids above asking, sellers are more likely to consider offers below list price, accept requests for repairs or credits, or contribute to the buyer’s closing costs.
The takeaway: Buying at a time like this means fewer bidding wars, more room to negotiate, and a better chance of getting a good deal without having to waive protections.
Buy Now or Wait Until 2026?
We expect most of these buyer-friendly conditions to remain in place through the end of this year and into 2026—with one key exception.
Home prices could actually fall further between now and then, improving the affordability picture for buyers even more. That’s the biggest variable in all of this.
This leads to one of the most common questions among buyers in Texas:
“Should I buy a home now or wait until 2026?”
Timing the bottom is hard because housing markets are complicated and driven by lots of unpredictable things.
There’s also a data lag that makes it hard to know what exactly is happening in the present—until after it happens.
Here are some best practices that apply to most buyers in Texas:
- Don’t try to pick the exact bottom. Instead, focus on your timing: how long you’ll live in the home, job stability, budget, and whether the monthly payment fits comfortably.
- Use market signals (days on market, price cuts, percent selling above list) to see whether your neighborhood is trending toward recovery. But treat them as clues, not guarantees.
- Protect yourself with contingencies, realistic offers backed by comps, and a plan to refinance if rates fall.
- If you expect to stay 5+ years, small timing errors matter less. Long-term ownership smooths out short-term market noise.
Here are some general guidelines for buying now versus waiting:
- Lean toward buying now if: you plan to stay 5+ years, have a solid down payment and emergency fund, can tolerate short-term price moves, and you find a property that fits your budget and needs at a sensible price.
- Lean toward waiting if: you expect to move in a few years, you’d need to stretch finances to buy, you want to avoid the risk of a near-term price drop, or you believe you can save a larger down payment and still get similar inventory later.
And here are five key trends to watch over the coming months:
- Local days-on-market and percent of sales above list.
- Number of recent price cuts in your target neighborhood.
- Mortgage rate direction from your lender or trusted national surveys.
- Local job news or big employers moving in/out (affects demand).
- New listings and inventory; higher inventory usually favors buyers.
Conclusion and Summary
Falling prices, lower mortgage rates, rising inventory and longer days on market are giving buyers more choices and bargaining power.
If these conditions persist, 2026 could be a good time to buy in Texas.
But local conditions matter most. So watch neighborhood signals, run the numbers for pricing and affordability, and only buy when your finances and timeline make sense.
Disclaimer: This article is for general information and does not constitute financial, legal, or real estate advice. The publisher makes no assertions about future housing market conditions.