Houston Real Estate Market Report: Summer 2025

Summer 2025 is a market that is doing what healthy markets are supposed to do: absorbing demand at a pace consistent with supply and at prices that reflect genuine market clearing rather than speculative excess or distressed selling. Freddie Mac’s Primary Mortgage Market Survey (PMMS) moved from 6.87% in mid-June back toward 6.47% by early August as inflation data and labor market signals gave the bond market confidence that the Fed’s next cut is close. Houston Association of Realtors (HAR)’s July report shows Houston median home price at approximately $335,000, up 3% year over year. Days on market is running 44 days. Active listings have built to approximately 32,000 — more supply than buyers have had access to since 2019, which is healthy rather than alarming given the demand level.

The tariff situation I flagged in my spring report has produced some secondary effects on builder costs, particularly on lumber and steel-intensive components. The National Association of Home Builders (NAHB) reports builder confidence staying positive but with cost pressure on the input side that is limiting new construction starts in some markets. In Houston, where builder activity has been robust, the effect is being felt most in the outer suburban corridors where new construction volume is highest. Resale sellers in those corridors benefit marginally from any reduction in new construction competition, though the effect is not yet large enough to materially change the competitive picture.

Consumer Price Index (CPI) and the Rate Outlook

CPI for May and June came in at 2.4% and 2.6% respectively — staying near the Fed’s target without a clean break below 2%. The Fed has paused through June and July, and the CME Group FedWatch Tool tool is pricing a September cut with high probability at this point. If the July CPI print (due mid-August) shows continued progress toward 2%, the September cut becomes near-certain. My read on rates for fall: if the Fed cuts in September and the bond market accepts it as consistent with stable inflation, I think Freddie Mac rates could reach 6.0–6.25% by November. That would be the most accommodative rate environment since 2022 and would produce meaningful buyer demand expansion going into the fall market.

Houston Employment: Mid-Year Check

The Greater Houston Partnership Q2 report shows Houston has added approximately 55,000 jobs in the first half of 2025. That is below the peak pace of 2021–2022 but above the historical trend and across a broad set of industries. Energy employment is stable. Healthcare and medical center employment is growing. The logistics and distribution sector along the Ship Channel and the I-10 East corridor continues to expand. There is no recession signal in the Houston Metropolitan Statistical Area (MSA) data, which I continue to view as the critical foundation underneath the housing market’s demand side.

What I Am Watching Going Into Fall

Three things will define the fall 2025 market more than anything else: the September CPI print, the September Federal Open Market Committee (FOMC) decision, and the November FOMC decision. If the Fed cuts in September and the data supports continued cuts in November, rates drop toward 6% and fall 2025 becomes the most active October–November period since 2021. If inflation surprises to the upside in August and September, the Fed pauses again and rates stay in the 6.5–7% range, producing a fall that mirrors the cautious-but-functional market of the last two years.

My personal read, sitting here in August with the data I have: I think we get the September cut and a meaningful improvement in fall buyer activity. I could be wrong — I have been wrong about rate timing before in this report series — but the inflation trajectory and labor market data both support a cut, and I am calibrating my expectations for fall sellers accordingly. The window that opens if rates reach 6% by November has not been available since before the rate shock cycle began.