Property Makler
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Houston-The Woodlands-Sugar Land, TX MSA Housing Market Review 2025 Q3

05 Dec 2025

Executive Summary

Current Phase Extended: The Houston MSA remains in an extended stagnation phase as of October 2025, with 12M MA median listing price per square foot at $174.67, down only -0.9% YoY.
Cycle Phases Since 2017: Four well-defined phases identified—Stagnation I (2017–20), Fast Growth (2020–22), Growth (2022–23), Stagnation II (2023–Present)—reflecting price momentum and supply-demand dynamics based on precise 12M MA price per square foot YoY thresholds.
Peak Market Price: The peak was reached in May 2023 at $176.58 (12M MA), and prices have since remained within close range, declining less than 1.1% from that peak as of October 2025.
Supply Trends: Inventory has escalated, with active listings at approximately 30,947 (12M MA, October 2025), representing a 26% increase YoY, indicating a short-term oversupply risk despite stable long-term building activity.
Demand Environment: Employment remains flat near 3.45 million (Q2 2025), and rent pricing trails inflation slightly in real terms, while mortgage rates have stayed elevated around 6.5%, cooling affordability and demand._[1]
Outlook: The housing market is likely to remain in stagnation with subdued price growth as inventory remains elevated and mortgage rates high; a correction phase will only be triggered if prices decline beyond -2% YoY—a threshold not yet breached.
Strategic Implications: Buyers currently have leverage due to longer days on market (51.8 days 12M MA) and elevated supply; energy sector employment and permit activity will be critical to watch for possible market reacceleration beyond stagnation._[2]

Deep Analysis of Current Market Phase: Extended Stagnation (May 2023 – Oct 2025)

The Houston-The Woodlands-Sugar Land metropolitan area remains firmly in a stagnation phase characterized by 12-month moving average (12M MA) median listing prices per square foot oscillating within ±2% YoY growth or decline. As of October 2025, the 12M MA price stood at $174.67, down only -0.9% from $176.25 the previous year, thereby not crossing into the correction threshold requiring >2% annual price drop.

Key Indicators and Drivers:

Home Prices: The market price has remained remarkably flat since peaking at $176.58 (12M MA) in May 2023, with modest month-to-month declines consistent with a softening demand and a growing supply base.
Housing Supply: Active listings have increased, with nearly 31,000 homes on the market (12M MA), up 26% YoY, while median days on market (DOM) rose to 51.8 days (12M MA), signaling extended selling periods and a buyer-favorable environment more typical of balanced or soft markets.
Employment and Affordability: Employment levels are steady but stagnant near 3.45 million, suggesting demand is not expanding significantly. Rent growth is lagging inflation, eroding the incentive for renters to buy. Elevated mortgage rates of roughly 6.5% inhibit buyer affordability, keeping demand muted._[1]_[2]
Building Permits: New housing permits remain relatively stable around 5,600 units monthly on a 12M MA basis, indicating no surging supply but sufficient additions to meet incremental demand.

Potential Developments:

Given the current macroeconomic and housing supply fundamentals, Houston's market is unlikely to see rapid price growth in the near term. With mortgage rates remaining high and employment showing little net gain, homes may stay on the market longer and prices could fluctuate within the stagnation band. However, if mortgage rates decline or energy sector employment expands significantly—drivers historically important to Houston's economy—the market could transition toward growth.

Analytical Summary by Market Phases Since 2017

Stagnation I (Jun 2017 – Feb 2020)

During this phase, the median listing price per square foot remained stable, increasing modestly by about +0.8% YoY to $128.33 (12M MA). Inventory levels and days on market remained relatively steady at around 28,400 units and 57.7 days, respectively. Employment increased moderately (+7%), supported by recovery in oil prices, but building permits declined -10% reflecting restrained supply action. This phase ended as the pandemic-induced housing freeze began in March 2020._[3]

Fast Growth (Mar 2020 – Mar 2022)

Against the backdrop of low mortgage rates (<3%) and remote work migrations, prices surged +13.7% YoY to $166.67 (12M MA), inventory plummeted -36% to 13,635 units, and days on market fell to 45.9 days. Employment rebounded robustly by 15%. This phase ended with the Fed tightening cycle lifting rates to approximately 4.7% by April 2022, constraining demand._[1]

Growth (Apr 2022 – Apr 2023)

Price growth slowed to +4.8% YoY, inventory rebounded +24%, and days on market stabilized at 45.1, as permits rose +12% to just under 6,000. Employment growth moderated to +2%. Rising mortgage rates (~6.8% end of 2022) began damping affordability, culminating in a peak price in May 2023 and slowing momentum afterward.

Stagnation II (May 2023 – Present)

Since May 2023, prices have hovered within a tight ±2% band around $175/sq ft, while inventory surged +26% to around 31,000 units and days on market rose +11%, signaling a market in balance or minor oversupply. Employment has plateaued, and elevated mortgage rates have curtailed demand. The market exhibits classic stagnation characteristics per the defined thresholds._[1]

Market Phase Comparison Table

Phase	Duration	Peak 12M MA Price per Sq Ft (YoY %)	Inventory 12M MA (% Change)	Median Days on Market 12M MA	Employment Change	Permits 12M MA (Units)	Key Phase Drivers
Stagnation I	Jun 2017–Feb 2020	$128.33 (+0.8%)	+1%	57.7	+7%	5,158 (-10%)	Oil price recovery; stable jobs
Fast Growth	Mar 2020–Mar 2022	$166.67 (+13.7%)	-36%	45.9	+15%	5,558 (+5%)	Low rates; migration; stimulus
Growth	Apr 2022–Apr 2023	$176.08 (+4.8%)	+24%	45.1	+2%	5,968 (+12%)	Supply response; rising rates
Stagnation II	May 2023–Oct 2025	$174.67 (-0.9%, latest)	+26%	51.8	Flat	~5,600 (stable)	High rates; steady permits

Data sources: Fred, Realtor.com

Footnotes

1. Houston Housing Market: Trends and Forecast 2025-2026, Norada

2. Houston Housing Market Forecast 2026, HBI

3. Houston Properties

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