Houston’s real estate market is witnessing a notable shift as the median home price experienced a decline in February, signaling a potential advantage for homebuyers. According to a report by the Houston Association of Realtors (HAR), the median price dropped 1.2% year-over-year to $325,000, marking the most significant decrease since November 2023. This price adjustment comes as the supply of homes for sale expands, offering a more favorable environment for buyers.
Despite a 3% year-over-year decrease in sales, attributed to economic uncertainties including tariff threats and recession fears, the market appears to be stabilizing after a two-year slump. The previous spike in mortgage rates to 7.79% in October 2023 had contributed to the slump, but recent trends show a resurgence in buying activity.
While luxury home sales have driven the area’s average price up by 2.3% to $407,538, HAR Chair Shae Cottar emphasizes the importance of looking at the median price for a more accurate market picture. Cottar notes that the market is transitioning to a balanced state, tilting towards favoring buyers.
The recent decrease in mortgage rates is likely to attract more buyers. The latest average rate for a 30-year, fixed-rate mortgage is 6.7%, the lowest since October 2024. This decline has led to a 31% rise in mortgage applications over the past year, reflecting homebuyers’ eagerness to capitalize on the favorable rates.
Amidst this, inflation cooling in February has opened up the possibility of the Federal Reserve cutting interest rates as soon as June. However, ongoing tariff policy fluctuations and federal government layoffs remain potential economic disruptors. Nonetheless, for now, the spring homebuying season presents promising opportunities for buyers.
According to Cottar, the combination of declining prices, falling interest rates, and a larger home supply creates an ideal scenario for buyers. “It’s like, all the perfect things lining up right there,” he stated, highlighting the current market advantages. This alignment of factors suggests a promising horizon for those looking to purchase homes in the Houston area.