Houston Market Update - January 2026

Presently, the real estate market is being shaped by higher interest rates, increased buyer leverage, and improving inventory levels. While headlines and political developments have sparked short-term volatility, the broader trend continues to move in a positive direction. Below, we’ll break down where interest rates stand today, what current data says about buyer demand and inventory, and how these forces are shaping the Houston housing market as we head toward the spring season.

Mortgage Rates in Houston: Where Interest Rates Stand Today

At the time of writing the average 30 year fixed rate according to MND is 6.19%. 

When President Trump announced on January 8 his directive for Fannie Mae and Freddie Mac to buy $200 billion in Mortgage-Backed Securities, the average 30-year fixed rate dropped to its lowest level since February 2023, and for a hot second we saw the average rate hit 5.99%. That level, however, was short-lived. And now with all the chatter around Greenland and trade wars, the markets are reacting, pushing the 10-year Treasury Yield up and the 30-year fixed mortgage along with it.

Fortunately, despite the volatility it seems rates have settled into a channel in the low 6.0s, and the average rate is about where it was this time last month. 

Will Trump’s plan to buy $200bn Mortgage-Backed Securities lower rates?

Yes, but with some caveats.

First, it’s worth noting how this plan is supposed to work. When Government-Sponsored Enterprises (GSEs) like Fannie Mae and Freddie Mac buy up mortgage-backed securities (bonds), it increases demand for these bonds, thereby driving up their price and pushing yields (rates) down. Lenders then pass these savings to borrowers in the form of lower mortgage rates.

Now, the caveats: 

1. Don’t expect rates to drop back down to where they were during Covid. Analysts predict a potential drop of 0.25% to 0.50% in rates.

2. The actual long-term impact will depend on the pace and duration of the purchases, as well as broader market factors like inflation and other geopolitical factors like trade wars and actual wars. See again above, and how the uncertainty around Greenland pushed rates back up.

I think the real takeaway for consumers (especially buyers) is that there are a lot of factors at play here, and things can always change suddenly. It is therefore impossible to forecast with any certainty where rates will be in the future, and you can never time the market. The actionable advice is to just know what the average mortgage rate is when you’re shopping for a loan so you know if you’re getting a fair deal or not.

Buyer Demand and Housing Inventory: What the Data Is Signaling

Mortgage purchase applications are a forward-looking indicator of housing demand. I.e. if mortgage applications are increasing, more buyers are entering the market. So far 2026 is trending above 2025, so that’s a positive sign. 

Inventory is also trending in a positive direction. More inventory means more options for buyers, which also helps keep prices in check.

Is Houston a Buyer’s Market? Months Inventory and New Listing Trends

Month’s Inventory in Houston is sitting at 4.5 months, while the last 2 weeks have shown double-digit growth in new listings. Compare that to January 2022 (peak of the pandemic boom) where we had 1.4 months of inventory, and January 2019 (a more “normal” market) where we had 3.7 months of inventory.

So yes, the market is favoring buyers right now, but we’re getting closer to “pre-pandemic norms”.

What This Means for Houston Buyers and Sellers

The takeaway remains largely the same as it has been over the last few months: buyers have more leverage today, but well-positioned homes are still selling. This is not a stagnant market, but one that is more balanced than it was during the pandemic.

Encouragingly, we’re seeing positive signals on both the demand side and supply side of the equation. Mortgage purchase applications suggest demand is improving, while inventory growth is giving buyers more options and reducing upward pressure on prices. If these trends continue and we avoid any major economic disruptions, the spring market should reflect a healthier, more functional environment for both buyers and sellers.