What 2024 Taught Us About Houston Real Estate and How to Prepare for 2025

As we reflect on the Houston real estate market in 2024, it’s clear that the year brought a blend of challenges and opportunities for buyers, sellers, and investors alike. Despite economic uncertainties and fluctuating mortgage rates, the market demonstrated resilience, growth, and adaptability. Here’s a detailed look at the key trends, insights, and takeaways that defined Houston’s housing market over the past year—and what they mean for you as we step into 2025.

Houston Housing Market in 2024: Key Highlights

1. Steady Growth in Home Prices The median home price in Houston rose to approximately $334,290 in 2024, marking a 1.3% year-over-year increase. Although slower than in previous years, this growth reflects a stable and healthy market. The average home price also saw a rise, reaching $425,150, up 5% from 2023.

Neighborhood Breakdown:

• The Heights: Median home price at $700,000, up 4.5%

• Midtown: Median home price at $400,000, up 3.2%

• Sugar Land: Median home price at $450,000, up 4%

• Katy: Median home price at $380,000, down 0.38%

These increases highlight Houston’s strong demand for homes across diverse neighborhoods, catering to various demographics, from families to young professionals.

2. Expanding Inventory Levels Inventory in Houston reached a 4.0-months supply by year-end, the highest since 2012. This increase provides a more balanced market, offering buyers more options while easing competition.

Key Drivers:

• Increased new listings and completed construction projects

• Slower market activity in early 2024, allowing inventory to build

Buyers now enjoy more negotiating power, particularly in suburban areas and mid-range price points.

3. Mixed Trends in Days on Market (DOM) Homes in Houston took longer to sell in 2024, with the average DOM increasing to 42 days, up from 32 days in 2023. However, desirable neighborhoods like The Heights and Montrose still saw homes sell within weeks, often above the asking price.

Contributing Factors:

• Higher mortgage rates (6.5% average for 30-year fixed loans)

• Seasonal slowdowns during spring and early summer

The Rental Market: Rising Demand

Houston’s rental market remained robust, driven by higher home prices and interest rates pushing many toward renting.

• Average Rent: $1,193 for one-bedroom units; $1,492 for two-bedroom units

• Vacancy Rates: 5.0%, reflecting strong demand

Hot Spots: Downtown Houston and Midtown saw the highest rental rates, with two-bedroom apartments averaging $2,100/month. Suburban areas like The Heights offered slightly more affordable options, ranging from $1,800 to $2,000.

What Shaped the Market in 2024?

Several economic and demographic trends influenced Houston’s real estate dynamics:

• Economic Strength: Houston’s diverse economy, anchored by energy, healthcare, and technology sectors, attracted new residents and sustained housing demand.

• Population Growth: Younger professionals and families continued to move to Houston, drawn by its affordability and opportunities.

• Interest Rates: While rates remained elevated, the Federal Reserve’s rate cuts in late 2024 sparked renewed confidence among buyers.

Looking Ahead: 2025 Market Predictions

As we enter 2025, Houston’s housing market is poised for continued, albeit moderated, growth:

• Home Prices: Forecasted to rise by 2% to 3% annually, keeping Houston attractive to buyers and investors.

• Rental Market: Rent prices are expected to increase by 3% to 4%, with vacancy rates remaining tight.

• New Construction: Efforts to address the affordable housing shortage may gain momentum, but significant impacts on inventory levels may take time.

Why Houston Remains a Prime Choice

From its thriving job market to diverse neighborhoods, Houston continues to be a standout city for real estate opportunities. Whether you’re buying, selling, or investing, the market’s stability and growth make it a compelling option. Key neighborhoods like EaDo, Sugar Land, and The Woodlands offer a range of properties to suit various needs.

Ready to Make a Move?

2024 was a year of resilience and opportunity for Houston’s real estate market, setting the stage for an exciting 2025. If you’re considering buying, selling, or renting, there’s no better time to act.

Contact me today for a personalized consultation and let’s make your real estate goals a reality in 2025.