Texas housing market hits worrying milestone as inventory triples

Texas housing inventory levels have reached their highest level since at least 2017, according to market expert Nick Gerli, a record he says will lead to a cooling of prices in the coming months.

“There are now over 113,000 properties for sale in Texas,” Gerli, Reventure’s CEO, wrote on X earlier this week, citing data collected by his app. “That’s nearly triple the level of 3 years ago and comfortably higher than before the pandemic,” he added.

For Gerli, all this suggests “continued downward pressure on prices in Texas for the remainder of 2024.” Newsweek Magazine I reached out to Gerli for comment via email on Friday morning.

According to Reventure data, in 2017 there were 103,726 properties for sale in Texas; a year later, they fell slightly to 103,069. While in 2019 they grew to 106,691 properties for sale, a year later they plummeted to 74,650. In 2021, at the height of the pandemic, inventory hit a five-year low of 45,795.

Since then, inventory has been growing in the Lone Star State: In 2022, there were 68,569 listings in Texas; in 2023, 81,587; and this year, 113,613, according to Reventure data.

Redfin reported an even higher number of listings in June, totaling 157,875, up 23.3 percent from a year earlier. Of those, 43,317 were newly listed homes.

“Texas is being affected by excess housing inventory across the state,” Gerli wrote on the social media platform. “Especially in Austin, Dallas and San Antonio, where inventory is now well above long-term norms.”

According to Gerli, San Antonio had a 52 percent inventory surplus; Austin had a 51 percent surplus; Dallas had 38 percent; and Houston had 14 percent.

“The result is that list prices across Texas are declining,” Gerli said. In Austin, prices are down 6 percent year-over-year. In Dallas and San Antonio, they’re down 4 percent. “Of course, even with these price declines, values ​​are still too high for most homebuyers to afford. Which is leading to continued weak demand,” Gerli noted.

According to Redfin, the median sales price of a home in Texas was $354,300 in June, down 1.1 percent from a year earlier.

“Texas is facing some of the same issues as Florida, in that homebuilders are continuing to deliver a huge number of homes, even in a declining demand environment,” he added. “At the same time, many investors in Texas are unloading properties purchased near the peak of the bubble. The result: rampant inventory growth and price cuts.”

High prices in Texas despite growing inventory are a cause for concern for Gerli.

“This was a market that used to be really affordable. Between 2005 and 2019, home values ​​in Texas were either undervalued or overvalued,” Gerli said.

“However, today prices are overvalued by 24 percent compared to long-term norms. Less than a couple of years ago, but still at an unprecedentedly high level. When prices are so overvalued, it creates a huge downside risk in the market. It means that values ​​have become detached from local income fundamentals,” he continued.

“Either prices must fall, or incomes must rise, or some combination of both, for buyer demand to return to the market.”