By Mark Sprague, Independence Title’s Director of Information Capital
As we plan for the coming year, many wonder what 2026 will bring for residential real estate. Will it mirror 2025 — better or worse? Will interest rates rise or fall?
Mortgage rates are trending downward, though slowly and with potential volatility. The Federal Reserve cut its benchmark rate in October 2025, and economic data shows a cooling labor market. Mortgage rates recently reached their lowest point of 2025, but they may stay above 6% through 2026 due to inflation pressures and increased federal borrowing.
Market expectations now favor a Federal Reserve rate cut, especially after reports of a weakening labor market.
Key Economic Factors:
- Economic slowdown: A cooling economy and rising unemployment support the Fed’s case for lowering rates to stimulate growth.
- Inflation concerns: Stubborn inflation continues to challenge the Fed, potentially limiting how quickly rates can fall.
- Federal deficit: High government borrowing adds upward pressure on interest rates.
Rates dropping below 6% would likely signal a struggling economy rather than a healthy one.
Texas Statewide Outlook for 2025–2026
Texas continues to outperform the national economy, though job growth is moderating from its rapid post-pandemic pace. The Dallas Fed forecasts a 1.3% job increase for 2026, slightly higher than earlier projections.
Energy prices and increased defense spending drive much of this growth, while restrictive immigration policies and slower migration may limit labor force expansion. Personal incomes are projected to rise by roughly 5% annually through 2026.
Austin–Round Rock
Austin’s year-over-year job growth averages 1.4% as of October 2025 — slower than 2024, but still among the nation’s top 10 metros. A slowdown in the tech sector has tempered growth, though unemployment remains lower than in most Texas metros.
Over the last five years, more than 100 companies have moved regional or corporate headquarters to Austin, keeping it high on the list for national relocations. As the tech sector stabilizes, expect steady, moderate growth to continue into 2026.
Dallas–Fort Worth
DFW maintains strong employment growth heading into 2026, supported by professional services, healthcare, and construction. Population growth and corporate relocations — over 120 in the last five years — continue to fuel expansion.
Dallas alone added an estimated 40,000–50,000 jobs in the past year, with new development projects creating more opportunities. While some sources predict mild labor market softening later in 2026, the overall outlook remains positive.
Houston
Houston’s job growth is slowing but remains steady. The city expects about 35,000 new jobs in 2025, down from earlier projections of 71,000. Healthcare and construction continue to expand, though at a more moderate pace.
Major projects from companies like Apple and Tesla could drive significant job creation in 2026, supporting long-term growth.
San Antonio
San Antonio’s real estate market should stay stable through 2026, with modest price appreciation and growing buyer activity. Rising inventory and shifting market dynamics will create more opportunities, particularly in higher-end properties.
After a quieter stretch, the market is gaining momentum heading into 2026.
Texas Suburbs and Smaller Towns
Smaller towns and suburbs around Texas’s six major metros are experiencing the most significant growth. Families and companies are choosing these areas for their affordability, strong schools, and small-town charm. Of the 9 million people added to the U.S. population in the past five years, nearly 25% have relocated to Texas.
If you have questions about market trends or local opportunities, contact your Independence Title representative — we’re here to help you plan with confidence.
