December '25 Houston Market Update & 2026 Forecast

In this month’s Market Update, we’ll examine where the market stands today, and what we might expect in 2026.

Average Interest Rates

At the time of writing the average 30 year fixed rate according to MortgageNewsDaily is 6.22%. We’’re seeing well-qualified buyers get rates with a 5-handle without having to pay points.

Current Seasonality

With it being December, we are in the thick of the seasonal slow months. In the chart below you’ll see at the end of the summer we had meaningful year-over-year improvements in single-family home sales. But the latest monthly data from HAR shows there was a YoY decline in November home sales. 

Month's Inventory: Buyer Market?

Months inventory is right around 5 months in Houston. I would say in general the market is buyer-leaning, but don’t be fooled into thinking any buyer can get any property they want at a deep discount. The best homes are still getting multiple offers. However, for buyers that are willing to take on properties that aren't immediate show stoppers, they have an opportunity to scoop things up at a good value.

Realtor.com’s 2026 Forecast

Realtor.com recently published its 2026 Housing Forecast. The broad strokes summary is that 2026 will feel strikingly similar to 2025. A big reason for this is that mortgage rates will basically be the same as they are now. Therefore don't expect any huge tailwinds that would cause a dramatic increase in home sales compared to this year.

Realtor.com forecasts existing-home median prices will increase by 2.2%. Factoring in inflation, prices will effectively remain flat or have a slight downward adjustment in real terms. 

Another thing that will add downward pressure on home prices is that inventory is expected to increase by 8.9%. Put another way, buyers will have more choices, and they'll have more leverage in negotiations than they did during the pandemic boom. However, don't expect prices to come crashing down, because there is enough demand in the system to prevent such a crash.

Mortgage application data is a forward-looking indicator giving us insight into housing demand. Think about it - if you're serious about buying a house, you're going to apply for a loan, and it typically takes about 30-90 days for purchase apps to lead to home sales. Note the chart below from Mortgage Bankers Association, and you'll see mortgage applications (i.e. buyer demand) are outpacing 2024 and 2023 levels. 

Takeaways

If you’re a buyer waiting for rates to drop significantly, it’s unlikely to happen barring a dramatic shock to the system (such as a recession accompanied by a surge in unemployment). Today's interest rates are the new normal. But even though you're not getting a sub-4% rate, there are options to choose from in the market, and in most cases you have the opportunity to get a good home at a good price.

For sellers, understand that next year's market is going to feel much like 2025, and there isn’t going to be a sudden boom in buyer demand. That means successfully selling your home will come down to pricing correctly from day one and presenting it well. Homes that are realistic and well-prepped are still selling.

If you’re thinking about making a move in the next 6–12 months, the smartest first step is understanding where you fit in this market. Whether you’re buying or selling, having a clear, data-driven game plan is invaluable. If you want help mapping that out, we're always happy to be a resource.