Allen Markel, REALTOR® · Texas Premier Realty

Market Updates & Home Values

Are home prices going to drop?

Answered by Allen Markel, REALTOR®, Texas Premier Realty ·

Short answer

No one can tell you with certainty whether home prices will drop. What the August 2026 data shows for Houston is that prices are relatively steady, inventory is elevated, and the market is moving toward balance. The right time to buy or sell is when you are able, ready, and willing, not when you are trying to time a prediction.

What does the current Houston market data actually show?

The most recent data available comes from the August 2026 Houston housing market report. Single-family home sales declined 11.5% year over year, with 7,100 closings recorded that month. At the same time, active listings reached 38,947 homes, and inventory held at 5.3 months of supply. For context, the national inventory figure sat at 4.6 months during the same period, meaning Houston has more available supply than the country as a whole.

On price, the picture is mixed rather than a clear drop. The median price of a single-family home came in at $330,000 in August 2026, which is down $5,000 from a year earlier. The average price, however, moved in the opposite direction, rising 1.2% to $426,760. When you look at existing single-family homes specifically, the average price declined 1.0% to $433,016 and the median fell 2.9% to $330,000 year over year. So depending on which number you look at and which segment of the market you are in, the story changes.

Townhomes and condominiums tell a different story still. The median price in that category fell 7.1% to $195,000, and inventory rose from 8.1 months to 8.8 months. That segment has more supply pressure than the single-family market, and the price movement reflects it.

Homes are also sitting on the market a little longer. Days on market for single-family homes increased from 52 days to 54 days year over year. That is a modest change, but it does indicate buyers have more time to evaluate their options than they did a year ago.

Does more inventory mean prices are about to fall?

More inventory gives buyers more choices, and it tends to slow the pace of price increases or put mild downward pressure on prices. That is what the data reflects right now. But elevated inventory does not automatically mean a price collapse is coming, and there is no guarantee prices will move in any particular direction from here.

Houston's affordability has improved on a year-over-year basis in 22 of the past 25 months as of August 2026. Part of that improvement came not just from price movement but from the relationship between prices and mortgage payments. The median price declined $5,000 while the average 30-year fixed mortgage rate rose slightly, from 6.59% to 6.67%. The net effect was a slight decline in monthly principal and interest payments compared to August 2025. That is a narrow margin, and it can shift quickly.

It is also worth noting that Houston's single-family market has held up better than the national picture in terms of transaction volume. The past 12 months saw 88,565 single-family home sales in the Houston area. In 2019, which is generally considered the last normal year before the pandemic, the total for the entire year was 86,999. Nationally, single-family sales were down 20.1% compared to 2019 during the same period. Houston's volume has returned to and slightly exceeded pre-pandemic norms, which is a different situation than many other markets face.

None of that means prices cannot fall further. It means the market is normalizing rather than collapsing, based on what the data shows right now. The data does not predict what comes next.

Why is trying to time a price drop often the wrong strategy?

Waiting for prices to drop before buying or selling sounds logical, but it carries its own risks. If prices do not drop, or if they drop only slightly while mortgage rates rise, the monthly payment on a purchase can end up higher than it would have been today. There is no guarantee that waiting produces a better outcome, and in many cases waiting is the biggest enemy of a good decision.

For sellers, the same logic applies in reverse. A market with 5.3 months of inventory and declining year-over-year sales means buyers have options and are taking more time. Waiting for conditions to improve is a bet on a direction no one can confirm. Pricing a home correctly for today's market is more reliable than holding out for a market that may or may not arrive.

The sales breakdown by price segment in August 2026 shows that not all price ranges are behaving the same way. The segment below $100,000 actually increased 11.1%, with 110 transactions. Every segment from $100,000 upward declined, with the $500,000 to $999,999 range seeing the steepest drop at 16.5%. That means the answer to whether prices are dropping depends heavily on which part of the market you are in. A broad statement that prices are falling or not falling misses how different the experience is across price points.

The FHFA House Price Index tracks repeat sales on the same properties going back to the mid-1970s, which gives a long view of how prices move over time. That index covers all 50 states and measures changes based on tens of millions of home sales. It is a useful tool for understanding long-run trends, but even that index does not predict future movement. It measures what has happened, not what will happen.

The right time to buy or sell is when you are able, ready, and willing. That is not a slogan. It reflects the reality that real estate decisions involve your timeline, your finances, your household situation, and the specific property, not just a market headline.

What should you actually watch if you want to track where prices are heading?

A few indicators are worth following if you want to stay informed without getting lost in noise. Months of inventory is one of the most useful. At 5.3 months, Houston's single-family market is in territory that generally favors neither buyer nor seller strongly, though it leans slightly toward buyers compared to the tighter conditions of recent years. If inventory climbs well above that level and stays there over several consecutive months, downward price pressure tends to increase. If it pulls back toward the 3 to 4 month range, prices tend to firm up. Watch the trend over several months, not a single report.

Days on market is another signal. The move from 52 to 54 days is small, but the direction matters. If homes start sitting considerably longer on average, that tells you buyers are hesitating and sellers may need to adjust pricing to move a property.

Pending sales give a forward-looking view. In August 2026, pending sales for single-family homes totaled 7,939. That number reflects contracts signed but not yet closed, so it gives a preview of what the next month's closings might look like. A sustained decline in pending sales would signal softening demand ahead.

Mortgage rates matter too, though they are outside anyone's control. The rate moved from 6.59% to 6.67% year over year as of August 2026. Even small changes in rate affect how much home a buyer can afford at a given payment level, which in turn affects how many buyers are active in the market and at what price points.

Our listing data tracks these indicators across the Houston area counties we serve, including Harris, Fort Bend, Montgomery, Waller, Grimes, and Austin counties. Conditions can vary meaningfully from one county or zip code to another, so a market-wide number does not always reflect what is happening in the specific area or price range you care about. Talk to us to find the right option for your circumstances.

Common follow-up questions

Did Houston home prices drop in August 2026?

It depends on the segment. The single-family median price fell $5,000 year over year to $330,000, while the average price rose 1.2% to $426,760. Existing single-family homes saw the average price decline 1.0% and the median fall 2.9%. Townhome and condo median prices fell 7.1% to $195,000.

How much inventory is there in the Houston housing market right now?

As of August 2026, single-family inventory held at 5.3 months of supply, with 38,947 active listings. That compares to a national figure of 4.6 months. Townhome and condo inventory rose to 8.8 months from 8.1 months a year earlier.

Should I wait for prices to drop before buying?

There is no guarantee prices will drop, and waiting carries its own risk if mortgage rates rise or inventory tightens. The right time to buy is when you are able, ready, and willing, based on your own timeline and finances, not a prediction about where prices will go.

Are some price ranges in Houston doing better than others?

Yes. In August 2026, the under $100,000 segment increased 11.1% in sales volume, while every higher price range declined. The $500,000 to $999,999 range saw the steepest drop at 16.5%. The market is not moving uniformly across all price points.

How does Houston compare to the national housing market?

Houston's single-family sales volume over the past 12 months exceeded the total for all of 2019, the last pre-pandemic normal year. Nationally, single-family sales were down 20.1% compared to 2019 during the same period, according to the August 2026 report.

Sources

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Answers describe transactions and public data. They are not legal, tax or financial advice.