Rural Land | Summer 2025
A quarterly analysis of Texas land market activity and trends.
Last quarter, I reported annual sales volume slipped 2.9 percent year-over-year (YoY), but that the fourth quarter-only sales volume was down 13 percent. That played a role in a much larger annualized decline in sales volume through first quarter 2025, which was down 10 percent YoY (Table 1). The first quarter sales were stronger than the prior quarter but still well below first quarter 2024. Larger tract sizes in every Region, except Region 1, translated into an increase in total acres sold and total dollar volume in spite of the lower sales volume.
The statewide four-quarter moving average price increased 2.7 percent. This was a slight upside surprise and just enough to keep up with the price index (inflation). However, keep in mind that sales volumes are at ten-year lows. Anecdotal evidence supports the idea that quality properties are propping up prices. In other words, high quality tracts are selling much more commonly and quickly than average or below average tracts. This is what we refer to as a composition effect of sales. Recent weak demand stems from factors such as high interest rates and continued uncertainty regarding future prices, inflation, and economic growth.
Regional Market Dynamics
Variations in performance statistics by Region widened over the last quarter (Table 2). Prices were up in five of seven Regions, but total sales and total acres sold were down in four. The standouts were Regions 3 and 5 (West and Gulf Coast–Brazos Bottom) with double-digit price increases and at least modest growth in acres sold. Overall, the YoY comparisons are modestly positive, but there are unique contrasts and obvious weak spots within most Regions.
Price changes ranged from negative 18 percent to positive 12.9 percent, and sales volume changes ranged from negative 29.3 percent to positive 2.3 percent. Only one Region (Gulf Coast – Brazos Bottom) was positive across the board. This region has been remarkably strong in an otherwise unsettled statewide market. Additionally, Region 3 (West Texas) experienced the greatest YoY price surge with simultaneous growth in total acres sold.
Overview and Outlook
Slower economic growth and higher interest rates over the last two years are likely the largest contributors to the market slowdown. There are other issues that dampened affordability, such as high prices (statewide price per acre has more than doubled since 2020) and savings diminished by inflation over the past few years. Additionally, market participants still expect meaningful changes in federal economic policies (deregulation, tariffs, taxation, and government spending). However, the degree and timing of these policies and their impacts remain uncertain. General optimism toward the long-term benefits of owning rural land has not relieved the desire among many would-be market participants to watch from the sidelines in the near term.
Our latest forecast model predicts that statewide prices will most likely decline slightly over the next several quarters and possibly longer. More specifically, it indicates that statewide prices will decline 1 percent through the fourth quarter of 2025 and by 3 to 4 percent over the next two years. Regarding quantity of acres sold, our baseline model indicates a decline of approximately 3 percent through year end followed by a gradual reversion in 2026, back to current level by third quarter 2026, and continued gradual rise in total acres sold in 2027. Our baseline forecast uses Moody’s Analytics forecasted economic indicators. Naturally, as with any forecast, the range of possibilities widens along the timeline. Results are subject to change, especially as key inputs such as Texas total personal income, interest rates, and oil prices may change unexpectedly.
Recent price and volume dynamics indicate markets that are still unsettled and exhibit continued weak demand. Despite the uncertainty, the five-year growth rate in nominal price per acre is barely below 10 percent at 9.95 percent. Interest in Texas rural land remains high, and while price growth may decline in the near-term, over the long-term, land has proven to be an excellent investment and provides many opportunities for use and enjoyment even in slow periods.
Lynn D. Krebs, Ph.D. ([email protected]) is a research economist with the Texas Real Estate Research Center.
