Texas Real Estate Forecast –12 Months Ending Summer 2026 

Our forecast for the 12-months ending June 2026 was built in the context of ongoing uncertainty. The national and state economy slowed in the last year, but inflation had not worsened in the face of new tariffs. The Federal Reserve appears poised to lower the federal funds rate. The Trump administration continued pursuing a flurry of policy changes, and opponents have actively resisted many of them in court. These factors and more were on our minds while creating this forecast. 

Underlying Assumptions 

Our forecast assumes that no new macroeconomic or geopolitical shocks will put the U.S. or Texas economy on a different path. This assumption implies that existing policies, including trade policy, tax reform, and immigration policy will still impact the economy, but no new policies or events over the next year will change the trajectory of the economy. This assumption also implies that geopolitical events, such as the war in Ukraine or instability in the Middle East, will not escalate in ways that differentially affect the economy. We do not expect recessionary conditions to emerge over the next 12 months. 

Key Macroeconomic Drivers 

The following macro drivers are the most important determining factors in making the real estate forecast. Economic theory and actual historical performance suggest movements in one driver tend to accompany consistent positive or negative changes in others. Nevertheless, the level of certainty may differ across these metrics. This forecast uses three levels of uncertainty: 

• Significant (positive or negative) 

• Moderate 

• Low 

Economic Output (Gross Domestic Product, 3Q2026 quarterly annualized real growth over 3Q2025)
U.S.: 2% to 2.25%
TX: 2.25% to 2.65% 

Uncertainty: Moderate

Jobs (Payroll Employment, September 2026 change over September 2025)
U.S.: 0.8% to 1.2%
TX: 1.5% to 1.9% 

Uncertainty: Moderate 

Income (Personal Income, September 2026 nominal change over September 2025)
U.S.: 4.75% to 5.25%
TX: 4.75% to 5.25% 

Uncertainty: Moderate 

Spending (Personal Consumption Expenditures, September 2026 real change over September 2025)
U.S. 2.3 to 2.7% 

Uncertainty: Moderate 

Population (TX Population 2026 change over 2025)
1.2% to 1.6% 

Uncertainty: Moderate 

Interest Rates (in September 2026)
Federal Reserve Fed Funds Target Range: 3% to 3.5%
30-Year Fixed Mortgage Rate: 6% to 6.4% 

Uncertainty: Significant 

Inflation (annual rate of change in September 2026)
Consumer Price Index: 2.1% to 2.5% 

Uncertainty: Significant 

Energy Prices (in September 2026)
West Texas Intermediate: $65
Henry Hub Natural Gas Prices: $3.25 

Uncertainty: Significant 

Asset Forecasts 

The Center tracks market performance of several assets, in three broad categories: residential, including single family homes (for sale and for rent) and multifamily (apartments); commercial space, including office, industrial, and retail; and rural land. Our researchers project supply, demand, transaction volume, and price or rent for each asset. For each asset, this report provides: 

• A summary of performance through summer 2025. This is the baseline from which the year ending summer 2026 forecasts are presented.  

• The most important macroeconomic drivers for each asset. These have the most weight in the projections, and Center researchers applied the driver estimates in their forecasts of asset performance.  

• Projections and a statement of the perceived uncertainty of each. 

Single-Family Housing

2025 Situation: Texas has 8.3 million single-family homes, eight million if which are single-family detached units. After a weak start in 2025, single-family home sales are projected to end the year at about 340,000 units. With continually elevated mortgage rates, buyer affordability remains constrained. Meanwhile, inventory availability, coupled with steep seller price cuts, has shifted conditions in favor of buyers. Median home price for the year was trending to end at $345,000. Statewide single-family rents remained flat and were trending toward $2,300 per month at year end. 

Starts: Declining interest rates and steady demand are expected to generate a 4 percent increase over the 2025 trend in single-family permits to 169,000 in 2026. 

Uncertainty: Significant 

Sales: After starting the year with weak activity, home sales rebounded at the end of the spring homebuying season. With mortgage rates expected to drop lower in anticipation of one or more Fed rate cuts for the remainder of the year, homes sales in the second half of the year are projected to rise. While still below the 2021 peak, the projected 2 percent growth would be the first notable increase since the pandemic. Total units sold will be near 340,000. 

Uncertainty: Moderate 

Prices: The increase in sales, largely driven by stabilizing demographics and an improvement in the macroeconomic outlook, will help moderate inventory, leading to a 1.5 percent increase in the median home price to $350,000.  

Uncertainty: Moderate 

Rent: Single-family rents will be flat to up slightly compared to their 2024 level, at about $2,200 – $2,300. 

Uncertainty: Low 

Multifamily Housing 

Texas’ apartment market has over 2.5 million units, which equates to an apartment for every 11 residents in the state. In the prior 12 months, total deliveries were over 92,000 units. Average per-unit monthly rent in the summer of 2025 was $1,470.  

Deliveries: Apartment deliveries will be much lower through the summer of 2026. Statewide deliveries will total less than 40,000 units. 

Uncertainty: Low 

Rents: Multifamily rent growth will continue to be soft in new units for the next 12 months. New unit concessions translate into negative effective rent changes. Rent in stabilized units will be flat to slightly positive.  

Uncertainty: Medium 

Office Space 

2025 Situation: The state’s office market includes 1.2 billion square feet of leasable space. This amounts to 82 square feet per payroll worker. This inventory grew by over six million square feet through the summer of 2025, or about 0.6 percent. Statewide rents in the major markets ranged between $23 for Class C space to over $60 per square foot for Class A+ space. 

Deliveries: New deliveries will slow again through summer 2026, totaling five million square feet. This equals an increase of about six tenths of a percent of inventory. 

Uncertainty: Low 

Net Absorption: Net absorption, at four to five million square feet, will come close to equaling total deliveries. Premium buildings will continue to fair best. Some older Class A, along with Class B and C buildings, may give up space.  

Uncertainty: Medium 

Rents: Over the next 12 months, effective rent growth should be positive for Class A+ properties and for Class A space in Dallas Fort-Worth. Class A space elsewhere will be flat to slightly positive. Class B and C buildings will see negative effective rent changes. Summer 2026 ending rents will average near $25 for Class C, and almost $29 for Class B buildings. Older or lower-end Class A space will range from $32 to $51 per square foot, depending on MSA, with Austin in the high end and San Antonio at the low end. New premium, or Class A+ buildings are expected to command from $10 to $15 more per square foot than Class A. 

Uncertainty: Medium 

Industrial Space 

2025 Situation: The Texas industrial warehouse market includes 1.8 billion square feet of leasable space. This averages out to 128 square feet per payroll worker in Texas. Inventory grew by 2.5 percent in the 12 months ending summer 2025. The total increase was almost 44 million square feet. Rents across major markets ranged between $8.90 and $12.90 at year end. 

Deliveries: The industrial pipeline has been shrinking since the peak during the pandemic. Total new deliveries will approach 3 percent of inventory, or about 50 million square feet, by summer 2026. 

Uncertainty: Low 

Net Absorption: In a sign of a recovering market, warehouse net absorption will come close to equaling net delivered space, or 2.8 percent. Statewide net absorption will hit or exceed ten million square feet each quarter. 

Uncertainty: Medium 

Rent: The degree of warehouse overbuilding varies by market, and the expected turning point in each market also differs. Most major markets should see some rent growth by the summer of 2026. In 2Q2026, Houston and San Antonio may produce 3 to 4 percent growth and DFW 2 percent. Austin should expect to see further (but lessening) losses for the next 12 months. 

Uncertainy: Medium 

Retail Space  

Retail markets in Texas include 1.5 billion square feet of leasable space. This amounts to 51 square feet of retail space per person. In the year ending 2025Q2, Texas added almost ten million square feet of retail space. Retail rent per square foot ranged from $23 in San Antonio to $31 in Austin. DFW and Houston rents sat at $25 per square foot.  

Deliveries: Statewide inventory will grow by over five million square feet, or 0.5 percent through summer 2026. DFW has seen an expanding pipeline, faster than expected project deliveries could increase the total above by a few more million square feet.  

Uncertainty: Low 

Net Absorption: Net absorption will equal 0.5 to 1 percent of inventory. This will maintain market balance. 

Uncertainty: Medium 

Rent: Retail rent growth will continue to be solid, with DFW expecting at least a 3 percent increase year-over-year (YoY). Rent growth will be around 2 percent in other major markets. 

Uncertainty: Medium 

Rural Land Market 

2025 Situation: The state’s rural land market is composed of about 142 million acres—approximately 83 percent of all Texas land and more than the total acreage of all but one state: Alaska.  

The median price per acre rose YoY through 2024 by less than 2 percent. However, though the rate of increase declined through 2024, the first two quarters of 2025 have seen that rate climb again, albeit on relatively low sales volumes. The number of sales fell dramatically from 2022 to 2023, stabilized through mid-2024, then slipped a bit lower over the last few quarters through mid-2025.  

While the statewide total number of acres sold is at a 10-year low, the market has been holding in a tight range for about two years now. Given the recent strength in price per acre so far in 2025, it should be no surprise that total dollar volume rebounded slightly and is back above 2019 levels.    

Sales Volume (in acres sold): With interest rates widely expected to be lower in 2026 than in 2025, we expect sales activity will pick up. However, this will take a few quarters to materialize, so we forecast rural land sales volumes will be flat to slightly down through early 2026 but slightly up YoY by the end of 2026.  

Uncertainty: Medium 

Median Price: Statewide prices will likely hold near recent levels or increase slightly through 2026 (more of the same). There will likely be regions with strong price gains while others may experience a decline in median prices.  

Uncertainty: Medium 

Legal and Regulatory Outlook 

The TRERC forecast calls attention to new and emerging legal and regulatory issues. The Center expects potential impacts on real estate markets due to the following legal and regulatory issues. Their ultimate impact will depend on factors such as implementation and interpretation by the legal system and market participants.  

At the federal level, the new tariffs and the litigation surrounding them continue to be a wild card. Efforts to reduce government spending and taxation could play a role in the markets. Federal agency policy, rules, and enforcement continue to be relevant.  

Several new laws passed by the 89th Texas Legislature have the potential to affect real estate markets. Among them are:  

Property Development  

SB 15, which encourages density of development by limiting the extent to which certain cities may impose minimum size or density requirements, or certain requirements for parking, open space, or permeable space.  

SB 840, which encourages conversion of nonresidential property for residential use by limiting the authority of certain cities to regulate mixed-use residential and multifamily residential development. The new law allows certain mixed-use and multifamily residential projects to go forward without a zoning change.   

SB 2477, which encourages conversion of properties to mixed use or multifamily residential use by changing certain zoning and land use amendments and prohibiting certain impact fees.  

HB 24, which makes it more difficult to protest certain zoning changes.  

SB 1883, which changes the process by which local governments may impose or increase impact fees.  

SB 1566, which allows municipalities to provide utilities to property within their service areas, even if the property has been removed from their ETJ.  

HB 2559, which limits municipalities’ use of moratoriums to prevent property development.  

Water  

SB 7, which dedicates revenues to water infrastructure projects over the next twenty years. This requires voter approval in November.  

Property Tax  

SB 4, which increases the general school district residence homestead exemption from $100,000 to $140,000. This requires voter approval in November.  

SB 23, which increases the additional homestead exemption for elderly or disabled individuals from $10,000 to $60,000. This requires voter approval in November.  

Foreign Ownership  

SB 17, which prohibits ownership of Texas real estate by certain foreign buyers. 

Sources for 2025 asset statistics: 

Single-family: Texas REALTORS ® Data Relevance Project, U.S. Census Bureau American Community Survey 

Multifamily, office, industrial, and retail: CoStar Group Inc, www.costar.com, U.S. Census Bureau American Community Survey 

Rural land: Texas A&M Natural Resources Institute, Texas Farm Bureau