10 Texas Cities Where Home Prices Are Predicted to Drop in 2025

Have you been dreaming of owning a home in the Lone Star State? Texas has long been a popular destination, attracting people from across the country with its robust economy, thriving job market, and fantastic weather. But, like many other parts of the country, the Texas housing market is also experiencing shifts, and 10 Texas cities where home prices are expected to fall in 2025 are emerging as a potential opportunity for buyers.

While some areas are experiencing continued growth, the predictions suggest a slight downturn in specific cities by the end of 2025, creating a potentially advantageous environment for those looking to buy. Let's delve into these cities and explore the factors that might lead to these predicted price declines.

10 Texas Cities Where Home Prices Are Expected to Fall in 2025

Before we dive into the specific cities, it's important to understand the broader context of the Texas housing market. Currently, the average Texas home value is around $300,267, which has experienced a slight 0.2% dip over the last year. This is a shift from the previous years of consistent growth. The median sale price sits at $334,083, while the median list price is a bit higher at $363,600.

As of October 31, 2024, there's a sizable inventory of 134,768 homes for sale. This is an indication of a more balanced market, where buyers have more options. There are also 29,060 new listings which further indicates a more balanced market. This increase in inventory and the slight dip in home values suggest that the market is moving away from the seller's market we've seen in recent years and gradually transitioning toward a more balanced state.

Factors Contributing to Potential Price Drops

Several factors might contribute to the anticipated decline in home prices in certain Texas cities by the end of 2025. Here are some of the primary considerations:

• Interest Rate Fluctuations: The Federal Reserve's efforts to control inflation have resulted in higher interest rates, impacting affordability for potential homebuyers. This can slow down demand and put downward pressure on prices, especially in areas where affordability is already a challenge.
• Economic Slowdown: While Texas's economy remains strong, there are concerns about a potential nationwide economic slowdown. If the economy weakens, it could lead to job losses or reduced income for some, which may result in less demand for homes.
• Increased Inventory: As mentioned earlier, the inventory of homes for sale in Texas has increased, providing buyers with more options. With more homes available and demand potentially softening, it becomes a more buyer-friendly market, leading to more price negotiation and a slower pace of price appreciation.
• Local Market Dynamics: Each city has its own unique characteristics, economic drivers, and population trends. Factors like oversupply of new construction, changes in local industries, or shifts in population can also influence home price trends within a specific region.

10 Texas Cities Where Home Prices Might Dip in 2025

I've carefully reviewed data from Zillow to come up with the following list of 10 Texas cities where home prices could see a slight decrease by the end of 2025. I have to emphasize that this is a prediction based on current trends and should not be taken as financial advice. The housing market is dynamic, and unforeseen events can always impact the forecast.

1. Jacksonville, TX

Jacksonville, a city in East Texas, is experiencing moderate growth, but the home price growth might slow down by the end of 2025, with a predicted 4.6% decrease in home values from October 2024 to October 2025. While it's a charming city with a strong sense of community, its economic base primarily focuses on industries like manufacturing, retail, and healthcare, which are not immune to the impacts of broader economic shifts.

2. Stephenville, TX

Located in the heart of Texas, Stephenville is known for its role as the “Cowboy Capital of the World.” However, Stephenville's housing market might face a similar trend to Jacksonville, with a predicted 4.6% decrease in home values by the end of 2025. While the city boasts a strong agricultural sector and attracts students to Tarleton State University, the housing market might experience a slowdown due to the broader market dynamics mentioned earlier.

3. McAllen, TX

McAllen is a vibrant city in the Rio Grande Valley, often praised for its warm climate and proximity to the US-Mexico border. Yet, McAllen's home prices could experience a 4.4% decrease by the end of 2025, according to forecasts. The economy of McAllen is diversified with sectors like healthcare, trade, and tourism, but a potential slowdown in the economy could impact the housing market.

4. Brownsville, TX

Another city in the Rio Grande Valley, Brownsville, enjoys a significant presence of the Port of Brownsville, which plays a crucial role in the local economy. However, like McAllen, Brownsville's housing market might also see a decline, with the forecasts indicating a 3.6% decrease by the end of 2025. The economic health of the city and factors like border trade and tourism might continue to influence the stability of the market.

5. Corsicana, TX

Corsicana, a historic town known for its connection to the oil industry, might experience a slight decrease in home values in the coming years. Zillow predicts a 3.6% decrease in home prices by October 2025. While Corsicana is known for its unique character and industries like manufacturing and tourism, the home price growth might slow down due to the broader economic environment.

6. El Paso, TX

El Paso, a city located on the US-Mexico border, is a significant hub for trade, manufacturing, and logistics. The city offers a relatively affordable cost of living, but the predicted home price decline is 3.5% by the end of 2025. The manufacturing sector in the area can be susceptible to economic downturns, and the local economy might be impacted by broader shifts in the national and global economy.

7. Wichita Falls, TX

Wichita Falls, a city in North Texas, is an important center for aerospace, defense, and manufacturing. The city also attracts people to Sheppard Air Force Base. However, home values might decrease by 3.5% by the end of 2025. While the defense and related industries can provide stability, the city's economic diversity and the broader economic factors can impact the market.

8. Hereford, TX

Hereford, a city in the Texas Panhandle, is a significant center for agriculture and cattle ranching. It's also known for its role in the region's energy sector. The home prices in Hereford might drop by 3.5% by the end of 2025. With an economy tied to commodities like agriculture and energy, external economic forces could impact local demand and prices.

9. Palestine, TX

Palestine is a small city in East Texas that holds a rich history. The economy of Palestine largely relies on industries like manufacturing, agriculture, and healthcare. However, the home prices in Palestine could decline by 3.1% by the end of 2025. While Palestine is an affordable and quaint city, the economic outlook and external factors might influence the housing market's growth.

10. Tyler, TX

Tyler is located in East Texas and enjoys a strong economy driven by healthcare, education, and manufacturing. The city is also known for its beautiful rose gardens and has emerged as a medical hub. Tyler's home prices might experience a slight dip by the end of 2025, with a predicted decline of 3%. The housing market might experience a slower rate of growth due to the aforementioned market dynamics.

Data Summary

Here's a summary of the 10 cities and their predicted home price changes from October 2024 to October 2025:

City	Predicted Price Change (October 2024 – October 2025)
Jacksonville, TX	4.6%
Stephenville, TX	4.6%
McAllen, TX	4.4%
Brownsville, TX	3.6%
Corsicana, TX	3.6%
El Paso, TX	3.5%
Wichita Falls, TX	3.5%
Hereford, TX	3.5%
Palestine, TX	3.1%
Tyler, TX	3%

Important Considerations

• These predictions are based on current market trends and data and are not guarantees. There are many factors that can influence housing markets.
• The projected declines are relatively small. Even with these potential price decreases, the cities on this list still offer good values for homebuyers.
• The Texas housing market remains strong in many areas. These cities are specific cases and should not be taken to indicate a broader trend for the state.
• It's wise to consult with a local real estate professional when making any decisions related to buying or selling a home. They can provide you with current market data and insights relevant to your specific area of interest.

My Final Thoughts

In conclusion, the Texas housing market is expected to continue evolving in 2025. While some areas may see continued growth, the 10 cities I highlighted present a potential opportunity for homebuyers. These cities are experiencing specific factors that could lead to slight price declines. However, these potential drops in home values should be viewed within the context of the broader strong Texas housing market. It's a dynamic and nuanced situation.

I believe that careful research and a thoughtful approach are key to navigating this changing market. If you are considering buying or selling a home in Texas in 2025, it's wise to stay informed, understand the local market, and consult with a qualified real estate professional. I hope this article has given you a clear understanding of the factors impacting the Texas housing market and the cities where home prices might fall. Good luck with your future real estate endeavors!