Houston, Texas Housing Market Forecast 2024

In this report: a summary of current real estate market trends in the Houston, Texas metro area, with some general predictions stretching into 2024.

Home prices in Houston declined a bit in early 2023. But that will likely be a short-term housing market “correction,” after which prices begin rising at a slower pace in keeping with historical norms.

A recent forecast for this housing market predicted that Houston metro area home prices would rise by around 3.2% during the 12-month period ending in April 2024.

Overall, this real estate scene has become a bit more balanced over the past year or so. But it could begin to favor sellers later this year and into 2024, mainly due to ongoing inventory constraints.

Here are the latest housing market trends, analyses and predictions for the Houston-The Woodlands-Sugar Land metropolitan area, as of late spring 2023.

Current Housing Market Trends in Houston

In spring 2023, the Texas Real Estate Research Center (part of Texas A&M University) published a detailed housing market update for the Houston metro area. Among other things, that report indicated that the real estate scene has cooled down over the past year.

This mirrors a general slowdown in activity that has occurred in markets all across the country. The cooling trend began during the second half of 2022, following two years of overheated housing market activity brought on by the COVID pandemic.

Currently, many cities across the country are experiencing a slowdown (or even a decline) in home prices, along with reduced demand from buyers. And the Houston real estate market is no exception to this nationwide trend.

Here are some key points from their March 2023 report:

• Single-unit home sales decreased 20.46% year-over-year (YoY) from 10,090 to 8,026 transactions.
• The median home price for the Houston metro area declined 1.52% YoY from $330,000 to $325,000.
• Inventory within this real estate market rose from 1.1 to 2.6 months of supply, and days to sell rose from 77 to 93.

To summarize: the Houston-area housing market experienced a decline in both sales and home prices over the past year or so, resulting in higher inventory levels as of spring 2023.

It’s important to note that these are annual trends, spanning the timeframe from spring 2022 into spring 2023. When we drill down to the latest monthly data, we can see a different picture emerging as we approach the summer months.

For instance, supply levels within the Houston-area real estate market actually declined during the first few months of this year. This could make the housing scene more competitive going into the summer and fall of 2023.

So let’s examine that trend next…

Inventory Declined Over the Past Few Months

The chart below shows the “months of supply” for the Houston-The Woodlands-Sugar Land, Texas metro area, going back three years or so. We set the date range to begin in late 2019, so you could see how the COVID pandemic depleted inventory levels in this real estate market.

There are two other noteworthy trends in this chart:

• A sharp rise in supply levels that began during the first quarter of 2022
• A subsequent decline in supply that began at the start of 2023

A short-term prediction: the Houston real estate market could become more competitive for buyers during the summer and fall of 2023. With fewer properties on the market, buyers could find themselves competing for limited supply. Fortunately, it probably won’t be as severe as the inventory shortage of the past two years.

Much depends on what happens next. If supply levels continue to fall across the Houston metro area housing market, it would increase competition among buyers and put upward pressure on home prices. If supply levels stabilize, the real estate scene could become more balanced as a result.

One recent forecast for the Houston housing market predicts that it could begin to favor sellers more, into the spring of 2024. So let’s talk about that prediction next…

Buyer’s vs. Seller’s Market in Houston

Back in February, the online home-selling platform Knock published an update to its “Buyer-Seller Market Index.” According to the company’s research team:

“[this index] analyzes six key housing market metrics to measure the degree to which the nation’s 100 largest markets favor home buyers or sellers, median days on the market rose in nearly all markets in December, as inventory growth outpaced home sales year-over-year.”

Here is their assessment for the Houston-The Woodlands-Sugar Land metro area real estate market, including a forecast stretching into 2024:

• 12 months ago: Strongly Favors Sellers
• Current status (as of Feb. 2023): Neutral
• 12 months from now: Favors Sellers

The one-year-ago status is somewhat obvious. We all remember how the COVID pandemic shifted the real estate market into overdrive, creating “seller’s market” conditions all through 2021 and into the first part of 2022. That was a time of bidding wars and lightning-fast home sales.

Then came the nationwide cooling trend we’ve already discussed.

Looking forward, researchers at Knock believe this market will shift toward favoring sellers again. This could be due, in part, to the recent decline in supply levels.

But despite these predictions, we probably won’t see anything resembling the strong seller’s market conditions that occurred during 2021. Given current supply-and-demand dynamics within the Houston area real estate market, it’s hard to imagine fierce bidding wars breaking out anytime soon.

Coming Soon: Lots of New Home Construction

In May 2023, the Texas Real Estate Research Center published an updated “Texas Housing Insight” report with a summary of recent real estate trends. According to that report, a future rise in construction could give home buyers more options to choose from in 2024

That’s based on a recent surge in construction permit filings.

In February of this year, single-family home construction permits increase by 17% over the previous month. That’s for the state of Texas as a whole. The Houston metro area, in particular, had the biggest month-over-month increase in construction permits during that timeframe.

To quote the Texas Housing Insight report:

“All four major metros contributed to the statewide rise, as they all had positive gains for February. Houston led the way with a 33 percent increase over last month (3,793 permits) …”

This could provide future relief for home buyers in the area. But there’s often a substantial lag from the time construction permits are filed to the time the homes are actually built. So the current increase in construction probably won’t impact the Houston real estate market until 2024.

Major Population Growth Fueling Demand

Population growth plays an important role in current housing market conditions across the Houston metro area.

According to a recent report from the U.S. Census Bureau, it had the second-highest increase in population of any U.S. metro area from 2021 to 2022.

To quote the Census Bureau report:

“The Dallas-Fort Worth-Arlington, TX metro area had the highest numeric increase in population between 2021 and 2022 of any U.S. metro area, with an annual jump of 170,396 people, followed by the Houston-The Woodlands-Sugar Land, TX metro area which added 124,281 residents over the same time period.”

Over the past few years, population growth has made the Houston-area real estate market much more competitive for buyers. After all, those new residents need somewhere to live. This increases the need for housing, on both the rental and purchase side.

More housing is on the way, due to the increase in construction mentioned previously. But it will take some time for those new homes to actually hit the market. In the meantime, forecasts and predictions suggest that the Houston housing market will remain competitive through this year and into 2024.

Zillow Forecast: 3.2% Price Increase Into April 2024

Researchers from the real estate marketplace Zillow recently issued an updated forecast for the Houston housing market extending into 2024. They predicted the median home value for the metro area would increase by 3.2%, between April of this year and April 2024.

Here are the current average home values, based on Zillow’s data:

• The metro area: $302,588, up 2.4% over the past year
• Houston (city): $262,337, up 2.5% over the past year
• The Woodlands: $520,532, up 4.3% over the past year
• Sugar Land: $428,486, up 2.9% over the past year

Zillow’s is one of several predictions that suggest Houston house values will rise over the coming year or so. The difference this time around has to do with the size of the projected increase. In short, Houston-area home prices are expected to resume a more “normal” pace of appreciation, compared to the steeper rise seen over the past two years.

Disclaimer: This report contains predictions, projections and forecasts for the Houston metro area real estate market stretching into 2024. They’re the equivalent of an educated guess and should be treated as such. The Home Buying Institute makes no guarantees or assertions about future housing-related trends.