Houston Real Estate Market Report: Spring 2023

There is something like a floor forming in this market, and I want to be careful about how I characterize it because I have been wrong before about the timing of this cycle. What I can say with data is: the freefall is not happening. Houston Association of Realtors (HAR)’s April report shows Houston median home price at approximately $325,000, down from the $335,000 peak but no longer declining month over month. Active listings are holding in the 22,000 range without surging further. Days on market is stabilizing around 42–48 days. That is not a recovery. But it is also not a continuing collapse.

The rate picture gives me more uncertainty than the price picture. Freddie Mac’s Primary Mortgage Market Survey (PMMS) has bounced between 6.43% and 7.0% since the beginning of the year, with no clear directional trend. The Fed raised again in February, March, and May — 25 basis points each — and the May statement language suggests they may be done or close to done. The Consumer Price Index (CPI) trend is genuinely encouraging: we have gone from 9.1% in June 2022 to 4.9% in April 2023. If that trajectory continues, the argument for rate cuts in H2 2023 or early 2024 becomes stronger. I am not counting on it, but I am watching it.

The Buydown Economy

The seller concession that is defining Spring 2023 transactions is the rate buydown. I want to spend some time on this because it is worth understanding if you are either buying or selling. A 2/1 buydown funded by the seller gives a buyer a rate two points below market in year one and one point below market in year two. At a market rate of 6.7%, that means year one at 4.7% and year two at 5.7%. The seller typically pays $8,000–$12,000 to fund this for a $400,000 loan.

Why does this matter? Because a $10,000 price reduction and a $10,000 buydown concession are not the same thing. The price reduction saves the buyer $57 per month at 6.7%. The buydown saves $400–$600 per month in year one. Same seller cost, very different buyer experience. The sellers I am working with who are getting to contract in this market are almost always the ones who have understood this tool and are offering it proactively rather than waiting for a buyer to negotiate it.

Corridor Notes

Inner loop: I am seeing more balanced conditions here than in the suburbs. The medical center and energy sector buyer is still present and still operating on professional timelines. Museum District and Bellaire are moving in 25–35 days for well-presented, correctly priced homes. Montrose and Heights are slower — more like 45–60 days — at price points above $600,000.

Northwest: Bridgeland resale is competing against builder new construction that is now routinely offering rate buydown incentives equal to or exceeding what individual sellers can offer. Realtors Property Resource (RPR) data shows price-per-square-foot in the Bridgeland ZIP codes is holding but volume is down. Marvida is absorbing new construction buyers at a pace that suggests the community’s value proposition is landing with buyers even in a slower market.

The Woodlands: Most resilient market I am tracking. Corporate relocation demand is consistent and the medical campus growth in the north corridor is adding professional buyers. Days on market in The Woodlands proper is running shorter than the metro average.

Outlook for Summer 2023

I think summer holds where spring is. Rates stay elevated but do not spike further. Houston transaction volume stays below year-ago but does not deteriorate further. The sellers who price correctly and offer buydowns move product. The sellers who are testing peak pricing continue to sit. My one wildcard prediction: if inflation data for May and June comes in below 4%, I think the market psychology shifts meaningfully by August, even before the Fed acts. Buyer sentiment tracks the inflation trajectory as much as it tracks the actual rate, and a visible downward trend in CPI would bring buyers off the sidelines before rates actually fall.