Key Takeaways

Key Takeaways Mortgage rates in Texas hit 7.4% as of February 2026, more than doubling from 2021 lows and making homeownership unaffordable for many families Home prices continue climbing with a median of $385,000 statewide, driven by Texas adding 1,000 new residents daily while only building homes for 600 Homeownership rate dropped to 62.8% as families get priced out, and many current owners feel trapped by their low existing mortgage rates Cash buyers now represent 28% of sales in Texas, creating advantages for investors and sellers who need fast, certain closings without mortgage complications

Texas Housing Market 2026: What Rising Mortgage Rates Really Mean for Homeowners

Look, I've been buying houses in Texas for over two decades, and I'm telling you — what's happening right now in the Lone Star State is something we haven't seen since the early 1980s. Mortgage rates are pushing toward 7.5%, home prices are still sky-high, and a lot of folks are feeling trapped in their current situations.

Let me break down exactly what's happening in Texas housing right now, because whether you're thinking about buying, selling, or just trying to figure out your next move, you need the real story — not the sugar-coated version you're getting from traditional real estate.

The Current State of Texas Mortgages

Here's the deal: as of February 2026, the average 30-year fixed mortgage rate in Texas is sitting at 7.4%. That's more than double what we saw just four years ago. I had a homeowner call me last week from Austin who bought in 2021 with a 3.2% rate, and now he's looking at his neighbor's house that just sold for $50,000 more than his — but that neighbor needed a 7.5% mortgage to buy it.

The Texas Department of Housing and Community Affairs reports that loan originations have dropped by 31% compared to last year. That means fewer people are qualifying for mortgages, and even fewer are willing to take on these higher rates.

But here's what really gets me — banks are being pickier than ever. The days of easy qualification are long gone. Credit score requirements have tightened up, and lenders want to see bigger down payments and lower debt-to-income ratios.

Texas Home Prices: Still Climbing Despite Everything

You'd think with mortgage rates this high, home prices would start dropping, right? Well, not exactly. The median home price in Texas hit $385,000 in January 2026 — that's up 4.2% from last year.

Why aren't prices falling? Simple supply and demand. Texas is still growing like crazy. We're adding about 1,000 new residents every day, but we're only building homes for about 600 of them. Do the math — that shortage isn't going anywhere fast.

Here's the breakdown by major metros:

• Dallas-Fort Worth: Median price $425,000 (up 3.8%)
• Houston: Median price $375,000 (up 4.1%)
• Austin: Median price $485,000 (up 2.9%)
• San Antonio: Median price $310,000 (up 5.2%)

At HOMESELL USA, we're seeing more homeowners who want to move but feel stuck because upgrading would mean giving up their low mortgage rate for something much higher. It's what economists call the "rate lock-in effect," and it's real.

The Affordability Crisis Nobody's Talking About

Let's be honest about something: homeownership in Texas is becoming a luxury item for many families. The Texas A&M Real Estate Center shows that you now need a household income of about $95,000 to afford the median-priced home in Texas. Five years ago, that number was $62,000.

I've seen this a hundred times — families who could easily afford their mortgage payment are getting priced out because they can't qualify for today's rates and prices. It's especially tough on first-time buyers who don't have a home to sell.

The homeownership rate in Texas has dropped to 62.8% as of early 2026, down from the peak of 65.1% we hit in 2022. That might not sound like much, but it represents thousands of families who are stuck renting when they'd rather own.

What This Means for Current Homeowners

If you own a home in Texas right now, you're probably in one of these situations:

You've got equity but feel trapped: Your home has gained value, but moving would mean a much higher mortgage rate. A lot of homeowners are choosing to renovate instead of relocate.

You're struggling with your current mortgage: Maybe you took on more than you could handle when rates were low, or life threw you a curveball. Higher rates mean refinancing isn't an option, so you're stuck.

You inherited a property: With these market conditions, inherited homes are both a blessing and a headache. The value is there, but the carrying costs and taxes can eat you alive.

Whether you sell to us or someone else, here's what you need to know: if you're thinking about selling, don't wait for rates to come down. Nobody knows when or if that'll happen, and the Texas population keeps growing regardless.

The Investor and Cash Buyer Advantage

Here's something traditional real estate won't tell you: cash buyers and investors like HOMESELL USA are becoming a bigger part of the market because we don't need mortgages. While families are struggling to qualify for 7.5% loans, we can close in two weeks with cash.

In January 2026, cash purchases made up 28% of all home sales in Texas — the highest percentage since 2013. That's not just investors; it's also people who sold their homes and are buying their next one with cash to avoid these crazy mortgage rates.

If you're dealing with a property that needs work, has title issues, or you just need to sell fast, the traditional market is even tougher right now. Buyers using mortgages can't deal with properties that need repairs — the lenders won't allow it.

Looking Ahead: What to Expect

I'm not going to pretend I can predict exactly what'll happen with rates or prices. But I can tell you what I'm seeing on the ground in Texas:

The Federal Reserve is still fighting inflation, which means mortgage rates probably aren't coming down dramatically anytime soon. Most economists are predicting rates will stay above 6.5% through 2026.

Texas will keep growing — our economy is too strong and diverse to slow down much. That means housing demand isn't going away, even if fewer people can qualify for mortgages.

More homeowners are going to find themselves in difficult situations, whether it's job changes, family issues, or just needing to move but being unable to afford it in the traditional market.

Your Options in This Market

Look, every situation is different, but here are the realistic options I see for Texas homeowners right now:

Stay put and improve: If you've got a low rate and decent equity, renovating might make more sense than moving.

Sell for cash: If you need to move or have a problem property, cash buyers can close fast without mortgage complications.

Rent out your current home: Keep that low mortgage rate and rent income, then rent somewhere else or buy with cash if you can swing it.

Consider seller financing: If you're selling and the buyer can't get traditional financing, you might be able to act as the bank.

The bottom line is this: the traditional real estate market is tough right now, but there are still options. You just need to think outside the box and work with people who understand the whole market, not just the pretty parts.

At HOMESELL USA, we buy houses in every condition, in every situation, all across Texas. No mortgage requirements, no repair demands, no months-long closing processes. Sometimes that's exactly what people need in a market like this.

If any of this sounds like your situation — whether you're feeling stuck, dealing with a problem property, or just need straight answers about your options — give Uncle Charles a call. No pressure, no judgment, just honest information about what's really happening in Texas real estate.

Frequently Asked Questions

Frequently Asked Questions

Q: Should I wait for mortgage rates to come down before buying or selling in Texas?

A: Nobody knows when rates will drop significantly, and they might not. Texas keeps growing regardless of rates, so waiting could mean missing opportunities or dealing with even higher prices later. Focus on what makes sense for your situation right now.

Q: I have a 3% mortgage rate but need to move. What are my options?

A: You could rent out your current home to keep that low rate, sell for cash and buy your next home with cash, or consider if staying put and renovating makes more sense. Each situation is different, but don't feel completely trapped.

Q: How much income do I need to afford a median-priced home in Texas now?

A: With current rates and the median price around $385,000, you typically need a household income of about $95,000 to qualify for a mortgage. That's assuming good credit, reasonable debt, and a standard down payment.

Q: Are cash offers really that much stronger in today's Texas market?

A: Absolutely. Cash buyers made up 28% of Texas home sales in January 2026. No mortgage contingencies, faster closing, and ability to buy properties that need work gives cash buyers a huge advantage over financed purchases.

Q: What happens if I can't afford my current mortgage payments?

A: Don't wait until you're behind on payments. With current rates, refinancing probably isn't an option, but selling might be — especially if you have equity. Talk to someone who understands distressed situations before you fall behind.