Following two years of pandemic-related volatility, the Texas real estate market showed signs of stabilization in 2022, according to the 2022 Texas Real Estate Year in Review report released today by Texas Realtors. Consistent growth in sales prices throughout all major MSAs, a smaller range between original list prices and sales prices, and a decline in sales reveal a steadying market trend.
Lower unemployment rates increased per capita income, and continued population growth was a contributing factor to a strong seller’s market in most areas of Texas, according to the report. These robust economic conditions favored sellers as the housing supply and prices continued to increase. The number of Texas home sales cooled slightly from 2021 while the median price hit another record-breaking high.
“2022 was a year of encouraging trends and stabilization for Texas real estate,” said Marcus Phipps, chairman of Texas Realtors. “The economic conditions throughout the state resulted in another year of high demand, while the report data indicates that market dynamics have largely leveled out after the 2020 pandemic. We’re still seeing median home prices climb, but other factors, such as higher mortgage rates, caused a slight decrease in the number of home sales last year. We’re also seeing accepted offers come much more in line with listing prices rather than the bidding wars that had been common in many Texas markets.”
The 2022 median home price reached $340,000, up 13.3% from the previous year, while the median price per square foot of $174.17 represented an increase of 15.9% from 2021 and a 35.3% jump since 2020. Homes spent an average of 35 days on the market, 1 day more than in 2021.
James P. Gaines, Ph.D., a research economist with the Texas Real Estate Research Center at Texas A&M University, commented, “The federal funds rate is likely to plateau in 2023, which will have an impact on mortgage rates as well as construction lending rates. The Texas economy is strong, but with higher construction and mortgage lending rates, we expect sales to revert to normal levels. Supply will still be limited, as indicated by low months of inventory. Additionally, work-from-home arrangements seem to be locked in, minimizing one of the reasons people choose to move. We may see this factor begin to reduce the rate of housing transactions across Texas.”
The number of homes sold statewide decreased by 11.3% in 2022, with 367,472 sales, after two years of unprecedented growth. Despite the decline in sales, the total number of sales is the third-highest on record and the second-highest total dollar volume of sales. Housing inventory at the end of the year rose to 2.7 months, an increase of 1.5 months from the end of 2021. According to the Texas Real Estate Research Center, a market balanced between supply and demand has between 6 and 6.5 months of inventory.
Chairman Phipps added, “While we saw 30-year mortgage interest rates rise from 3.1% to 6.5% and another increase in the median house price last year, there’s still a strong demand for housing across the state. Realtors across the state will continue working with Texans who buy and sell homes to help them realize their real estate goals in 2023.”
Click here to read the full report from Texas Realtors.