Texas housing loses its luster after pandemic boom – Yahoo Finance

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Texas — once one of the hottest pandemic boom states — is losing its popularity among potential buyers.

“When it comes to the housing market at large, the really interesting part right now is there is a lot of weakness in Texas,” Lance Lambert, ResiClub co-founder and CEO, told Yahoo Finance Live (video above).


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The rapid shift, prompted by rising mortgage rates and home insurance premiums, has left only the most committed of buyers.

Read more: Mortgage rates at 20-year high: Is 2023 a good time to buy a house?

Year over year, sales volume in the state dropped 14.2% in September, according to the latest analysis from the Texas A&M University Texas Real Estate Research Center.

Contacts from the Dallas district reported in the Federal Reserve’s latest Beige Book that home sales and buyer traffic declined while cancellations rose. They also pointed to higher mortgage rates as a key factor impacting activity.

“Buyer incentives, including rate buydowns and discounting, remained widespread, and there were reports of additional incentives being offered to discourage buyers from canceling contracts,” the Beige Book said.

Read more: Types of mortgage loans: Buying a house in 2023

Prices also are still on the rise, increasing 1.8% month over month, or by almost $6,000, the Texas A&M report found. Overall, 56% of home sales were priced between $200,000 and $400,000.

“The Texas Repeat Sales Home Price Index peaked in July and retreated slightly in September,” the report said. “After suffering major price corrections earlier in the year, home price growth has gradually grown back to rates comparable to the peaks from last year.”

Top view residential houses with swimming pool and colorful fall foliage suburban Dallas, Texas, USA. Straight down look as satellite style.

Home sales volume in Texas dropped 14.2% year over year in September. (TrongNguyen via Getty Images)

But that’s not the only reason pushing buyers to the sidelines. Home insurance companies are charging more and insuring less to compensate for weather-related losses over the past several years.

Data from the S&P Global Market Intelligence found that since January 2022, approved home insurance rates have increased between 20% and 30% in Texas, Oregon, Utah, Arizona, Illinois, and North Carolina.

“Those markets, they saw prices move up fairly fast during the pandemic, but they’ve also been hit by insurance shocks, home insurance is moving up fairly fast in Texas and Louisiana,” Lambert said.

“You’ve just seen some weakening because there is some supply, and some of the buyers in those markets had a bit of an edge and can kind of negotiate,” Lambert added.

Still, there’s a glimmer of new activity. Pending home sales jumped 9.7% in Dallas in October from September, per data from Redfin.

“It’s just one month,” Daryl Fairweather, chief economist at Redfin, told Yahoo Finance. “It’s definitely possible it could go back down next month, but maybe it’s a start of a trend; it’s just a little bit too early to tell now if more sales are happening.”

Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv.

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