Houston’s housing market is cooling, not cracking. Fewer homes are selling, they are taking a little longer to sell, and prices are mostly holding. Then September gave buyers a new problem: mortgage rates jumped.
Here is where things stand in October 2026, using the latest full report from the Houston Association of REALTORS (August) and what has happened with rates since. After that, we will cover what it means if you are selling and what it means if you are buying.
Where the Houston market stands
HAR’s August 2026 report is the most recent full month of data. For single-family homes:
- Sales: 7,100 homes sold, down 11.5% from August 2025.
- Median price: $330,000, down 1.5% (about $5,000) from a year ago.
- Average price: $426,760, up 1.2%.
- Time to sell: 54 days on average, up from 52 days a year ago.
- Inventory: 38,947 active listings, a 5.3-month supply. That matches last year and sits above the national figure of 4.6 months.
The median and the average moved in opposite directions because the median is the midpoint of all sales, while the average gets pulled up by expensive homes. For a typical Houston house, “steady to slightly lower” is the accurate description.
The slowdown was not even. Sales fell 13.7% in the $250,000 to $499,999 range, which made up more than half of August’s sales, and 16.5% between $500,000 and $999,999. Sales above $1 million slipped just 2.1%.
It also helps to keep this in perspective. Over the last 12 months, HAR counted 88,565 single-family sales, more than the 86,999 sold in all of 2019. This is a slower market than the pandemic rush, not a weak one.
The new problem: mortgage rates jumped in September
On September 16, the Federal Reserve raised its benchmark rate by a quarter point, to a range of 3.75% to 4%. It was the first increase since 2023, and most Fed officials expect at least one more before the end of the year.
Mortgage rates were already climbing. Freddie Mac reported the average 30-year fixed rate at 7.28% on October 1. That is up from 7.03% a week earlier, up from 6.71% at the start of September, and well above the 6.34% average a year ago. It is the highest reading since late 2023.
Here is what that does to a monthly payment. On a $330,000 home, the August median, with 20% down, principal and interest at 6.34% came to about $1,641 a month. At 7.28% it is about $1,806. That is roughly $165 more every month, close to $2,000 a year, for the same house. To get back to last year’s payment at today’s rate, the price would need to be about 9% lower. These are estimates for principal and interest only and leave out taxes, insurance, and HOA dues.
One caution: HAR’s August numbers were measured when rates were closer to 6.7%. The effect of the September jump will not show up in the data until the September and October reports come out. Anyone who tells you exactly what happens next is guessing.
What this means if you are selling
Buyers now have less purchasing power and more choices, and both work against a seller who wants a fast, full-price sale. Homes were already averaging 54 days on the market in August, and closing takes additional time after that.
If you plan to list, a few things matter more than they did a year ago:
- Price it correctly from day one. With 5.3 months of inventory, an overpriced listing sits, then sells for less after the price cuts.
- Expect buyers to ask for help. Closing cost credits, rate buydowns, and repair requests are common when monthly payments feel tight.
- Plan for financing risk. If rates keep climbing while you are under contract, a buyer’s loan can get shaky, and a deal that looked solid can fall apart.
A traditional listing still makes sense for some sellers. If your house is in good shape, you are not on a deadline, and you are willing to prep, show, and wait, you may net more on the open market. A cash sale makes sense when the other side of that equation hurts: the house needs work, the timeline is tight, you inherited a property you do not want, or you are dealing with a divorce, liens, or storm damage.
A cash offer has no financing contingency, so the rate environment does not change it. There are no showings, no repairs, and no agent commissions, and closing can happen in as little as 7 days. The tradeoff is real. A cash offer is usually lower than what a fully prepared house could bring on the open market, which is why it is worth running the numbers before you decide. If you want real numbers for your own house, ask us for a cash offer and we will walk you through it, with no obligation.
Timing matters most if you are behind on your mortgage. Texas foreclosures move fast, and a lender must post notice at least 21 days before the sale. A foreclosure listing service counted about 700 residential properties posted for Harris County’s October 6 auction. If you are in that spot, selling before foreclosure can help protect your equity and your credit, and the sooner you start, the more options you have.
What this means if you are buying
Buyers have more choices and more time than they did during the pandemic years, but the rate jump takes some of that advantage back.
- Shop lenders. Freddie Mac’s chief economist has pointed out that comparing multiple quotes can save thousands of dollars.
- Negotiate beyond price. With 38,947 homes on the market, sellers are more open to closing cost credits, rate buydowns, and repairs.
- Look at townhomes and condos. They had an 8.8-month supply in August, and the median price fell 7.1% to $195,000, which leaves more room to negotiate.
- Budget the full payment. Property taxes, insurance, and HOA fees can change the monthly cost a lot from one neighborhood to the next, whether you are shopping in Katy, Pearland, or The Woodlands.
If rates fall later, you may be able to refinance, but do not count on it. Buy a house whose payment you can carry at today’s rate.
What to watch next
- HAR’s September report, due in the coming weeks, which will show the first effects of higher rates.
- Weekly mortgage rates, which Freddie Mac publishes every Thursday.
- The Fed’s next move. Most officials expect another hike before year-end.
The market is slower, not broken. Sellers still have options, buyers have more time than they did, and rates are the variable that could change the picture. If you are thinking about selling and want to see what a cash sale looks like next to listing, our team of local cash home buyers will run the numbers with you, with no pressure and no obligation.
Sources: Houston Association of REALTORS August 2026 market report, Freddie Mac Primary Mortgage Market Survey (October 1, 2026), and the Federal Reserve statement of September 16, 2026. Figures reflect reports published through October 1, 2026.
