The Texas housing market may have finally calmed from the pandemic housing frenzy, according to the Texas REALTORS®’ 2022 Texas Real Estate Year in Review report.
Texas REALTORS® compiled their report using data from local Realtor associations and Texas Multiple Listing Services (MLS). According to the Year in Review, statewide trends like low unemployment, increased per capita income and sustained population growth cultivated a strong seller’s market throughout the year.
“2022 was a year of encouraging trends and stabilization for Texas real estate,” said Chairman of Texas REALTORS® Marcus Phipps in a news release. “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.”
The median home price across Texas in 2022 was 340,000, a 13.3% increase from 2021. Average days on the market also increased year over year, with the typical home selling in 35 days — one day higher than in 2021. Median price per square foot also increased by 15.9% to $174.17. Homes saw the biggest year-over-year price increases in Killeen-Temple, El Paso and Sherman-Denison; however, prices increased in every metro area across the state.
The majority of the homes sold in 2022 fell into the $200,000 to $399,000 price range, with 98.7% of homes selling at their original list price.
Closings decreased by 11.3% in 2022, following two years of increases. However, the report also found that total statewide sales volume amounted to the second-highest dollar amount of all time.
Furthermore, housing inventory rose to a 2.7-month supply at the end of 2022, which represents an increase of 1.5 months from the end of 2021. No metro area in Texas had more than 4.2 months of inventory at the conclusion of the year.
Of course, this decrease in sales activity can be attributed, in part, to doubling interest rates throughout the year. While interest rates were at a low 3.1% in January 2022, that amount shot to 6.5% by the end of the year.
Despite this, experts say the Texas economy is still strong. “The federal funds rate is likely to plateau in 2023, which will have an impact on mortgage rates as well as construction lending rates,” said James P. Gaines, a research economist at Texas A&M University’s Texas Real Estate Research Center. “The Texas economy is strong, but we expect sales to revert to normal levels. Supply will still be limited as indicated by low months of inventory.” Gaines also pointed out that work-from-home arrangements seem to be locked in, minimizing the reasons people choose to move. “We may see this factor begin to reduce the rate of housing transactions across Texas,” he said.