Higher Interest Rates Transform Housing Market, Texas Real Estate Workforce

The Texas real estate market has undergone a significant boom-bust cycle in the five years following the pandemic, driven by fluctuating interest rates and shifting labor dynamics. After an unprecedented surge in residential sales and new agent licenses during a period of low borrowing costs, the market contracted sharply as mortgage rates rose above 7 percent. These developments highlight the sensitivity of the real estate workforce to macroeconomic shifts and the critical role of agent-assisted transactions in the state's economy.

The Texas housing market experienced a dramatic acceleration starting in 2020, with quarterly sales rising 22 percent from 90,000 to 110,000 units by mid-year. This activity was fueled by federal stimulus, remote work trends, and mortgage rates dropping below 3 percent, which contributed to a 40 percent increase in home prices between 2020 and 2022. This environment attracted a record number of new real estate agents, with new salesperson licenses surging 60 percent from 4,000 per quarter in early 2020 to approximately 6,500 per quarter by 2021.

The influx of new professionals was primarily driven by women, who sought the flexibility of real estate work following pandemic-era job losses. While becoming a salesperson in Texas requires only basic coursework and exams, the path to becoming a broker is more rigorous, requiring four years of licensure, up to 900 hours of education, and at least 12 closed transactions. As of November 2025, Texas held approximately 210,000 active real estate licenses, representing about 1.1 percent of the state’s adult population. This workforce is essential as home equity accounts for 45 percent of the median American homeowner’s net worth.

The market landscape shifted abruptly in 2022 when interest rates reversed course, eventually exceeding 7 percent for the first time since 2001. This spike in borrowing costs led to a 50 percent decline in the rate of new salesperson entries by the end of 2024 compared to the 2021–22 peak. Despite the contraction in volume, the National Association of Realtors indicates that agent-assisted sales remain dominant, with 90 percent of buyers and sellers utilizing brokers or salespeople. This trend persists despite the growth of low-cost online platforms, as the value of closed sales per agent increased by approximately one-third during the recent boom.