The Houston housing market showed encouraging signs of balance in January including expanded inventory and steady buyer demand, according to the latest monthly Housing Report from the Houston Association of REALTORS®.
Active listings increased 15.7% year over year, with 54,589 properties on the market during the month. Closings fell 1% year over year, with 4,999 homes sold — the fewest transactions since January 2023.
However, pending sales increased 8.5%, with 6,813 listings going under contract, indicating strong sales in the coming weeks.
Days on market increased to 66, up five days from a year prior. That was the highest average since February 2020, when homes spent an average of 68 days on the market.
Prices fluctuated, with the median decreasing 0.9% to $233,045 and the average increasing 2.8% to $416,722. Luxury home sales — those with a price tag of $1 million or more — increased 15.5% year over year.
“Right now, buyers have more choices and a bit more time to make decisions, while sellers are adjusting to a market that’s becoming balanced,” said HAR Chair Theresa Hill. “With rates expected to ease a little this year, buyers who have been waiting on the sidelines may start to feel more confident and enter the market. That should help maintain demand and create additional opportunities for sellers throughout the year.”
Given the rate of sales, Houston had a 4.7-month inventory, up from 4.2 months a year prior.
Decreased mortgage rates and median prices meant improved affordability for homebuyers last month. Assuming a 20% down payment, the typical Houston homebuyer in January needed to spend $1,561.26 per month, down from $1,722.81 in January 2025. That amounts to about $2,000 less annually.
January was the 15th of the last 18 months with improved housing affordability.
Looking only at existing-home sales, closings decreased by just 10 sales annually, with 3,422 homes sold in January. The average sales price increased 3.8% to $428,152, while the median was steady at $320,000.
Among for-sale townhomes and condominiums, sales dropped 25.9% last month, with 269 units sold. The average price decreased 8.6% to $226,343, while the median fell 11.9% to $185,000. That was the lowest level since February 2021.
Townhome and condo inventory hit a 7.6-month supply, up from 5.5 months in January 2025.
Pre-leasing is underway at Echo Lake, a 326-unit multifamily community at City Place in north Houston. The building’s developer, Fein, anticipates first deliveries in February and move-ins in March.
Offerings include studio, one-, two- and three-bedroom apartments and one- two- and three-bedroom townhomes with attached garages. Certain units also have private yards.
The project is set to earn Silver certification from the National Green Building Standard. Wellness amenities and features include a 1.25-acre lake and trail system, open green spaces and property-wide Wi-Fi.
Echo Lake is located at 2022 Spring Stuebner Road within the City Place commercial development (formerly Springwoods Village). Fein’s other developments in the community include The Mark, The Canopy and the Belvedere.
“Echo Lake represents an important evolution of our City Place portfolio,” Rebecca Luks, vice president of development for Martin Fein Interests, said in a press release. “We’ve thoughtfully designed this community to deliver a variety of housing options, enhanced technology offerings and strong value for residents seeking walkable, nature-oriented lifestyle moments from major employers, shopping, dining and entertainment.”
Leases of single-family rentals leapt 9.4% year over year in December, with 3,283 leases signed. At the same time, new listings jumped 21.2% year over year with 5,486 SFRs added to the MLS, providing a plethora of single-family options for Houston renters. Amid increased inventory, the typical SFR stayed on the market for 48 days, up one week from December 2024.
For the full year, renters signed 47,292 leases, up 6.2% from 2024. The total dollar value increased 6.9% to over $110 million.
Lease prices were relatively flat throughout the year, with the average declining 0.8% year over year to $2,245 in December. That was nearly $20 cheaper than December 2024 and marked the sixth-straight month of statistically unchanged prices.
“A growing supply of rental properties gave renters more flexibility in 2025, while steady demand kept leasing activity moving at a healthy pace without putting upward pressure on prices,” said HAR Chair Theresa Hill. “Even as interest rates ease, rental demand is expected to remain strong this year.”
For townhome and condominium rentals, leasing activity in 2025 stuttered compared to 2024 but increased annually in December. Houston renters signed leases for 7,171 condos and townhomes in 2025, down 3.9% year over year, but leased 518 in December, up 11.2% from December 2024. Days on market increased from 49 days to 51 days.
The pattern shows up in many areas of the country: development activity fills in between two metropolitan areas, typically along one or more highways that connect them. Orlando to Tampa along I-4 is another prime example, and there are dozens more around the country.
From New Braunfels to San Marcos, as well as closer-in suburbs, the stretch between Austin and San Antonio is starting to fill in, providing young families and singles with an alternative to home ownership. The map below, featuring data from CoStar and supplemented by original research by Hunter Housing Economics, shows the built-to rent (”BTR”) units that have already been built, as well as those that are under construction and proposed in that stretch. BTR housing fills the heretofore unserved set of households who want a suburban place with a yard or some small patch of private outdoor space, but who cannot afford (or choose not to buy) a single-family home.
The stretch between Austin and San Antonio is “filling in” with proposed BTR subdivisions.
Hunter Housing Economics using CoStar Data and HHE Research
A large proportion of the BTR developments now completing units in areas like San Marcos and New Braunfels are single-family detached homes, and as one gets closer to the larger cities of Austin or San Antonio, one finds more townhomes and more of the “horizontal apartment” style (also referred to by the more palatable “cottages”), which gives tenants a better living experience than typical apartments, in that they offer a ground-floor entry and usually a fully-detached home, with windows on four sides, and a small backyard. This type of rental product is just starting to take off, being met by strong demand from singles, couples, retirees, and people who own dogs. (The advantage for dog owners is that they can let the dog out the back door instead of putting them on a leash and walking them down corridors and/or elevators to get outside).
Like the cottages, built-to-rent townhomes tend to get developed closer to the major cities. Townhomes typically offer more square footage, but also more shared walls, and are commonly found in “infill” types of locations. There is evidence of market support farther away from the major metros, as long as they are in good proximity to schools and shopping. Areas south of Austin like Buda and Kyle are experiencing strong population and household growth, amplified by a continued migration of Californians looking for a lower-tax environment and lower cost of living in general. New schools are popping up there, which appeal to the new residents. Rent concessions that has been in effect a year back are now being removed, boosting effective rents. Family demand is under-served in this region. Consequently, rents on new townhomes or duplexes in this area can be as high as $2,600 per month for 3-bedroom units and $3,000 per month for 4-bedroom units, if they include well thought-out floorplans and better features and amenities than the existing homes in the area. The cost to own similar units is close to $3,200 per month.
There is a significant rent premium over individually-owned rental homes, particularly homes that are not in a master-planned community. Research by Hunter
Survey of Renters, 2023, showing the various types of premiums of new BTR over scattered SFR and … [+] apartments. Q11 asked renters of suburban apartments how much more they would pay than their current rental amount to live in a rental townhome. Q12 asked how much more they would pay if it were a NEW townhome. Q13 asked how much more if that new townhome was in a new community that offered amenities like a clubhouse and pool.
Hunter Housing Economics
Housing Economics this year quantified the premium in the southern U.S. as $265 per month. On a percentage basis, renters are willing to pay 13.3% more for a newly built rental townhome than one that is not new, according to the survey results. The premium over a rental apartment meanwhile came in at 24.3%.
In the area north of San Antonio, BTR projects such as Pradera, Village at Vickory Grove, Eschelon at Monterrey Village, and Springs at Alamo Ranch have performed well. Rents in this area can get up to $2,500 per month.
Another example of this pattern of “filling in” between major cities is in Florida, along the I-4 corridor between Tampa and Orlando. This map shows the built-for-rent
The area between Tampa and Orlando is just starting to fill in, and the built-to-rent developments … [+] are coming. Although only a few have been developed in that region to-date, the years 2025 and 2026 will see more, and likely more in the subsequent years.
Hunter Housing Economics using CoStar data and HHE Original Research
developments that already exist in Tampa, extending mostly northward right now. From the other direction, spilling out of Orlando, there have been some BTR projects in Kissimmee and St. Cloud, due south of Orlando, and also to the west, mostly near Interstate-4.
Built-to-rent development activity is slowing now, and we will certainly see a sharp reduction in BTR starts next year, due to a shortage of capital. Developers who are planning projects to enter the market in 2025/2026 are likely to find a smaller number of projects opening up around them. Some of our clients are getting into position to pick up what might emerge as “distressed” BTR projects next year, when it is expected that some investors who tied up land will find themselves financially unable to close on the purchase. The lack of capital in this space could represent an opportunity for well-capitalized investors to pick up a contract or otherwise get into a deal that is not currently available. Next year should be an interesting one for BTR investors and developers.
Demand for rental housing is rising as the cost of ownership has risen.
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In his movie “Annie Hall,” Woody Allen recounts an old joke in which one woman asks another about a restaurant, and the other woman says “nobody goes there anymore; it’s too crowded.” In a similar way, some real estate investors are pausing their built-for-rent (”BFR” or “BTR”) projects, because they fear that it is about to become too crowded. This concern is justified in certain submarkets around the country, such as an area west of Phoenix, where there are seven built-f0r-rent cottage developments along a single 1.5 mile stretch of road. In most parts of the country, however, new supply is still falling far short of the demand for these kinds of rentals. Now it looks like some of the sidelined capital is about to resume investment activity in this space.
We define built-for-rent single-family housing as including the following purpose-built rental types: single-family homes built on individual lots, townhomes, duplexes and quads, and cottages developed on a single plat of land (sometimes called “horizontal apartments”).
When considering the outlook for this segment, which is universally regarded as one of the strongest segments of real estate, it is important to look both short-term and long-term. Here we look at both horizons.
Short-Term (Year 2023)
In our research today, we are seeing a sharp slowdown of rent growth, going negative in some places, but we see this as being limited to the current year (2023), after which rent growth will be decidedly positive.
It only stands to reason that rent growth had to slow down from the 15%-18% annual growth rates of the last couple of years. There is some confusion as to how much of a rent slowdown has already occurred.
The reader should beware of articles stating that rent growth is still in the range of 8%-10% today. Those statistics are looking at year-over-year percent-change instead of month-over-month. Year-over-year statistics have the advantage of eliminating seasonality, but they also obscure turning points.
The fact that often gets missed is that month-over-month, rents are flat or down.
One of my favorite data sets to watch is the CoreLogic SFRI (Single-Family Rent Index), which get quite granular at the local-market level. Again, it is valuable right now to look at month-over-month data in order to spot possible inflection points. This graph illustrates that even though most markets are still up compared with twelve months ago, many are flat or down as of the last couple of months.
Austin’s single-family rents peaked in the Fall of 2022, and Miami single-family rents have been … [+] going sideways since last Summer. Orlando continued to see strong rent growth until the latest two months of data.
CoreLogic Single-Family Rent Index through October 2022, Analyzed by Hunter Housing Economics
Why did demand soften all of a sudden, starting last summer/fall? That is when people started to become fearful of a recession (and therefore, their income prospects). This caused people who were living with friends, roommates, or relatives, to defer plans to make the leap and get a rental of their own. Looking at the consumer confidence numbers, however, we see that confidence has started to come back up again.
We can expect household formations to improve, boosting rental housing demand, once consumer confidence rallies further. People who survive the layoffs that seem likely to arise later this year (most people will) will eventually decide to “get on with life,” particularly if they recently had a child and feel the strong need to have a home of their own with some private outdoor space. Based upon this outlook, the weakness that is just starting to show up in single-family rents will be relatively short-lived. Demand fundamentals are still strong. The graph below shows the recent actual trend in single-family rents, which has declined on a month-over basis for the past three months, but is expected to start to regain its footing in 2024 and 2025. Forecasts are subject to significant error, of course, particularly during times of volatility, but this suggests a path forward that is consistent with what we are seeing in the market, the pipeline that is coming to market, and the demographic and economic forces that are at work.
The historical data in this graph are from the Corlogic SFRI (single-family rent index), with … [+] October 2023 being the latest actual number. The forecast portion is from Hunter Housing Economics.
Hunter Housing Economics January 2023 BFR Forecast
Longer-Term: The BFR Outlook for 2024 and Beyond
Whereas prior generations had children while they were in their mid-20s, many millennials have deferred childbirth to their 30s, and some studies suggest that they are going to start families in larger numbers over the next several years. With a newborn or a toddler in an apartment, these young families would typically prefer a house with a yard, and more space in general than they might have in an apartment. That is the key to the growth in demand that we expect for built-f0r-rent single-family homes. The demographics show that as the “bulge” of millennials moves up in age over the next four to five years, demand for family-friendly housing will increase.
Combine that with the fact that millennials are moving up rapidly in their careers. Granted, their income growth will likely slow in 2023 as the economy softens, but the economy is likely to begin the next recovery cycle in 2024 and 2025, bringing strong percentage increases in incomes. Income growth is not going to stay at 11%-12% in 2023/2024 perhaps, but 8%-10% earnings growth is not unreasonable for people in their 30s to expect. That will support rent growth at single-family rental communities. A recent analysis by RealPage showed that market-rate renters are currently only spending 23% of their income on rent, which is well below the 30-33% that is considered a ceiling. There seems to be room to run, at least after the economy gets past this slump and demand starts roaring again.
The forecast for BFR volume is shown below.
This graph captures all types of built-for-rent communities, from single-family to cottages, and … [+] townhomes and duplexes, triplexes, and quads. The forecast calls for slower growth in 2023, accelerating again in 2024.
Hunter Housing Economics January 2023 BFR Forecast
This ramp-up over the next five years, tapering off by 2027, is consistent with the view that monthly-payment challenges will continue to divert single-family demand toward rental homes, and with the evolving needs of the 83 million members of the millennial generation, who are now outgrowing apartment living. The total number of units being built for rent came to roughly 120,000 last year, and will edge higher this year, followed by a significant uptick in 2024.
With the current concerns about the economy, many have observed that certain capital providers are on the sidelines. I have spoken with several institutional investors who say they are now in a holding pattern, given the recent changes in financing rates and housing demand, but also with many others who are still ready to invest in the immediate term in BFR. And, sooner or later the capital that is on the sidelines will re-enter the market, sending this sector to the high levels we’re showing on the bar chart. Our research suggests that (with the exception of Phoenix), the country is far away from being “too crowded” with BFR single-family projects. Once we get past this current slump, supply is expected to be chasing demand well into this decade.
