Texas and Florida housing markets are showing tentative signs of a Sun Belt real estate rebound in late 2026, as year-over-year price declines slow and unsold inventory drops. According to data from John Burns Research and Consulting, unsold inventory held by homebuilders has fallen 29% in Texas and 37% in Florida from peak levels, offering a floor for regional home values despite ongoing affordability hurdles.
The Bottom Line
- Inventory Absorption: Unsold builder inventory has dropped 29% across the broader Southwest and 37% in Florida from its cyclical peak, easing supply pressures that drove down home values since mid-2022.
- Valuation Adjustments: Austin, Texas, remains the only large U.S. metro currently rated as “fairly priced” by John Burns Research, trading roughly 9% above its long-term income-to-cost ratio, down significantly from pandemic-era highs.
Unwinding the Pandemic Overcorrection
The pandemic housing boom turned the American Sun Belt into a high-stakes migration destination, driven by population inflows, business relocations, and low borrowing costs. When the Federal Reserve began aggressively hiking interest rates in 2022, the region experienced an abrupt contraction. Austin emerged as a primary example of this correction, with home values sliding significantly from their 2022 peaks, per Zillow data. Similarly, Cape Coral, Florida, recorded price contractions exceeding 20% from its historical highs.
Yet, the market dynamics heading toward the close of Q3 2026 reflect a transition phase. Year-over-year price declines across major Texas and Florida metros have decelerated, with several districts flattening or inching back into positive territory. Zillow’s data indicates that active listings in Austin dropped nearly 5% from peak levels recorded last year, while Cape Coral and Jacksonville saw active inventory contract by approximately 20% and 14%, respectively. This contraction in active supply signals that the era of runaway inventory accumulation has largely crested.
Institutional Strategy and Regional Divergence
Publicly traded homebuilders are recalibrating their deployment of capital across southern geographies, favoring markets where housing supply remains tightly controlled. Executives from prominent residential construction firms noted varying regional demand during recent earnings calls. While major builders remain selective in parts of Texas—where price cuts and incentives are still utilized to move standing inventory—operational performance in Florida and select coastal Carolinas has stabilized, supported by steady demographic migration.
At the same time, regional market health varies widely by price tier.
| Metro Area | Estimated Median Home Price | YoY Price Change | Estimated Rental Yield |
|---|---|---|---|
| Dallas, TX | ~$425,000 | ~0% | ~6.5% |
| San Antonio, TX | ~$309,000 | ~-3.3% | ~6.8% |
| Jacksonville, FL | ~$282,000 | ~-4.4% | ~6.2% |
| Cape Coral, FL | ~$338,000 | ~-10.4% | ~5.9% |
Macroeconomic Friction and the Path Forward
Despite shrinking inventory pools, broader economic variables continue to complicate a uniform recovery. Consequently, market analysts remain cautious regarding the velocity of any near-term rebound.
Nevertheless, the gradual digestion of excess supply across Texas and Florida establishes a structural foundation for future price normalization, offering a blueprint for how oversupplied regional housing markets adjust across the broader United States.
Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute financial advice.
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