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Major housing markets in Texas (finally) seeing the beginning of a housing inventory rebound

The good news for buyers: More homes are available. The bad news: Prices and mortgage rates are relatively high.

DALLAS — For so many months, if you showed up at a home for sale in North Texas, you could expect a mob of potential buyers and a quickly escalating bidding war. Well, there are signs that it has gotten a little bit easier to find homes for sale. But it has also gotten a lot more expensive.  

Here's what is going on in the major markets around Texas: According to the latest numbers (May 2022) from the Texas Real Estate Research Center, the median home prices in San Antonio ($345,000), Houston ($341,000), Austin ($550,000), and D-FW ($430,000), were driven up dramatically by scant inventory that had been measured in weeks and even days for much of 2021 and part of 2022. 

That is improving, though. Now, keep in mind that a six-month supply of homes is considered a balanced market. We're nowhere near that. 

But all the major metros have seen their inventory of homes for sale rising. The latest data from May shows Houston had more homes listed (1.3 months of inventory) than any time since January of this year, San Antonio had more on the market (1.6 months of inventory) than we had seen since November of 2021. 

In DFW, the number of homes for sale (1.2 months of inventory) was the highest it's been since October of 2021. And the Austin market—which has been out of control—had more homes available (1.2 months of inventory) than any time going all the way back to September of 2020!

Part of the reason there are more homes to choose from now is that they have gone up in price so much, so fast. Homes have appreciated $33,750 in Houston, $44,100 in San Antonio, $75,000 in DFW, and $199,000 in Austin since each market was previously at the above-mentioned inventory levels.  

Now, with more homes on the market, might we start seeing prices flatten out or even tick down a bit? At the end of May–the same month when we saw these rebounding home inventories, Redfin noted that nationally, more home sellers were starting to cut their prices. In fact, they found that there were more price drops than at any time since 2019. 

The other reason you see more for sale signs now — without the huge crowds around them — is interest rates. Mortgage rates have soared in 2022. 

Right now, the median Texas house costs $362,200. If you put 20% down and financed that home for 30 years at the beginning of this year, when the interest rate was 3.22%, your monthly principal and interest payment was $1,256. If you financed it at a recent rate of 5.7%, your payment jumped $425 to $1,681. That's a substantial difference.  

But inventory is starting to come back. If that causes prices to start to level off…or even start to fall a bit and you can afford the payment, you might be able to do something about the high-interest rate later.  

Historically, mortgage rates have frequently bounced up and down. Remember you can refinance later if rates fall, especially if they go a percentage point or more below the rate you are paying. And on the historical charts, that kind of drop happens often within several years. 

If you talk to licensed professionals, and it makes financial sense, you can refinance multiple times to keep bringing that long-term rate down. But, of course, don't bank on future rate drops; you still want to make sure you can afford the payments at the rates right now if you are buying (and borrowing) right now. Here is a mortgage calculator that may help you to sketch out some numbers.

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