Texas Housing Faces Record Correction as Supply Surges

The Texas housing market is heading toward a significant price correction as inventory levels reach highs not seen in years, with Austin experiencing the most dramatic decline nationwide, according to real estate experts.

Inventory across Texas hit 123,000 listings in April 2025, a staggering 53 percent above normal levels, positioning the state as the fourth most oversupplied housing market in the nation according to Newsweek.

Migration Slowdown Impacts Demand

The correction stems largely from a significant decline in migration patterns. In 2022, Texas welcomed 222,100 new residents through domestic migration. By 2024, that number plummeted to 85,200 – a 62 percent drop, according to data from Nick Gerli, CEO of Reventure App.

“The Texas housing inventory increase is primarily fueled by three factors: a wave of resale of newly constructed homes, a decline in migration into the state and a growing number of locals being priced out of the market,” explains Gerli in an analysis shared with DNyuz.

Austin: Ground Zero for Correction

The state capital has experienced the most dramatic decline, with home values dropping nearly 20 percent from pandemic peaks. According to Newsweek, Austin’s for-sale inventory reached 10,387 homes in 2024, more than any time in the previous seven years.

“Austin’s downturn is probably in the 6th or 7th inning,” Gerli told Newsweek. “Values are down almost 20 percent from peak, and inventory has spiked to highest level in nearly a decade. I suspect there will be a modest correction over the next year, with the market bottoming in late 2025.”

Widespread Price Declines Expected

A February report from Norada Real Estate Investments forecasts price declines in 31 Texas metropolitan areas by the end of 2025. Beyond Austin, more severe losses are anticipated in smaller Texas cities, with Pecos potentially seeing a 9.5 percent drop, Zapata a 7.2 percent decrease, and Sweetwater facing a potential 6.9 percent decline.

Marco Santarelli, founder of Norada Real Estate Investments, offered a cautiously optimistic assessment: “The Texas housing market currently presents a mixed picture… I believe that the Texas housing market will see a more balanced, and somewhat slower growth trajectory over the next couple of years.”

Future Outlook and Affordability Issues

Affordability remains a critical concern, with the typical mortgage and tax payment now consuming 32.5 percent of a household’s gross income – significantly above the historical average of 23 percent.

Gerli predicts a statewide price drop of an additional 4 percent over the next year, with further gradual declines potentially extending into 2026. “It is still likely that Texas’ market will be about a 10-12 percent overvalued at the end of 2025,” he noted, adding that the market will continue to struggle as long as affordability issues persist.