Home prices in key Texas metros, including Austin, San Antonio, and Fort Worth, are declining, marking a shift in a state that had seen housing market booms in recent years.

According to data issued by Redfin this week, Austin reported the sharpest drop, with prices falling nearly 3% compared to the same period last year. The trend is occurring amid rising mortgage rates and a general cooling of market demand, leading to price declines in San Antonio and Fort Worth, both seeing a 1.2% decrease.

This downturn in these Texas markets aligns with broader national trends where the spike in mortgage rates has begun to temper the previously overheated housing demand. 

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The report said the U.S. saw an average home price increase of 4.4% year over year to reach record highs, but the pace is showing signs of slowing. As mortgage rates hover above 7%, pushing monthly housing payments near record highs, potential buyers show increased reluctance, evidenced by a 6.4% rate of sellers cutting their asking prices — the highest proportion since November 2022.

As a result, properties are lingering longer on the market. The average listing is now active for 46 days, a 2.3% increase over the past year.

"There's no getting around the fact that it's expensive to buy a home right now, but some people are having luck negotiating with sellers," Bonnie Phillips, a Redfin agent, said in the report. "I've seen buyers get a home under asking price when it has been on the market for a few weeks."

These adjustments are more pronounced in the broader context of Texas’ real estate market. 

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While Austin, San Antonio, and Fort Worth see price declines, a statewide view shows mixed outcomes. Texas Realtors in April reported a modest 1.6% increase in the median home price across the state to about $331,000, even as sales volume remains steady.

The differing trends between local metros and the state overall suggest a realignment of the housing market, heavily influenced by interest rates that have remained at levels not seen in over two decades.

Those high rates have made financing more challenging and shifted some buyer preferences toward more affordable or alternative housing options. "Buyers are finding creative ways to afford a home, like buying a duplex, living in one unit and renting out the other," Phillips said in the report.

Jef Conn, chairman of Texas Realtors, said, "While interest rates have remained stubborn, there are good opportunities for buyers. For sellers, prices have held up compared to a year ago, signaling good opportunities to sell."

Despite some positive signs, the overall inventory levels in the state remain a concern. Texas still records inventory levels well below what is considered healthy, indicating that the supply of available homes cannot fully meet buyer demand.

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