Austin’s housing market is rebalancing as buyers gain leverage and sellers face slower absorption.
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The Austin housing market continues to move through a clear adjustment phase. Active listings have reached 15,756, which is 14.1 percent higher than this time last year and just below the summer high of 18,146 recorded on June 30. More than half of these homes, 58.3 percent, have already seen at least one price reduction. That level of adjustment shows that sellers are still aligning with what buyers are actually willing to pay.
The Activity Index, which measures how quickly homes are being absorbed, has dropped to 19.5 percent compared to 22.3 percent a year ago. That level places the resale side of the market in the Contraction Zone where slower sales and mild price declines usually occur. New construction continues to outperform resale with a 26.25 percent Activity Index, helped by builder incentives and rate buydowns that keep traffic and absorption steady.
Pending contracts have softened slightly, with 3,821 homes under contract compared to 3,960 a year ago. Year to date, the total number of pendings stands at 38,723, which is 6.6 percent lower than last year. That gap in demand is enough to allow supply to accumulate, especially when new listing volume continues to climb. The New Listing to Pending Ratio is currently 0.63, well below the long-term average of 0.82. When this ratio is below 0.75, it means new listings are outpacing new contracts, which leads to a buildup of inventory. Year to date, there are 7,343 more new listings than pending sales.
Months of Inventory is one of the most important gauges of market balance. Austin now sits at 5.6 months of inventory, up 14.2 percent from 4.9 months last year. A market with around four months of inventory is generally considered balanced. Once it rises above six months, buyers begin to hold the advantage. At this point, about 39 percent of the Austin market is in the neutral range while roughly 22 percent is already in clear buyer territory where market times stretch beyond 210 days.
This year has brought a steady flow of new listings. From January through November, Austin recorded 46,066 new listings, a 1.5 percent increase from last year and nearly 19 percent higher than the long-term average. That level of seller activity shows confidence in the market but also increases the risk of oversupply heading into winter if pendings do not rise soon.
Prices have stabilized but remain well below their 2022 highs. The current median sold price is $451,000, down 18 percent from the May 2022 peak of $550,000. The average sold price is $611,941, roughly 10 percent below the 2022 high of $681,939. Compared to last year, prices are almost flat, down less than two percent, which suggests Austin may be near the bottom of its correction phase.
Assuming today’s median price of $451,000 represents the bottom, it would take about four years for Austin to return to its previous peak near $551,000 using the city’s historical 25-year average appreciation rate of 4.99 percent per year. Based on that rate, the recovery timeline would extend to roughly early 2030 if steady growth resumes.
The pricing gap between the upper and lower segments of the market continues to widen. Homes in the top 25th percentile have seen a 6.4 percent price increase and a 3.2 percent gain in price per square foot over the past year. In contrast, homes in the bottom 25th percentile have experienced a 0.7 percent price decline and a 2.4 percent drop in price per square foot. This reflects stronger demand for higher-end and new-construction properties while more affordable segments face slower absorption and deeper negotiations.
The Absorption Rate, which measures how much of the active inventory sells each month, is 16.48 percent. The historical average is 31.7 percent, which means today’s market is moving at about half of its typical pace. Only about one in six active listings sells within a given 30-day period. The Market Flow Score, which blends multiple turnover measures into one efficiency index, is currently 4.66 compared to a historical average of 6.59. These two figures confirm that the market is functioning but doing so slowly.
Sales volume supports the same story. Year to date, Austin has closed 27,899 sales, a 3.3 percent decline from last year but still 7.8 percent above the long-term average. Adjusted for population, sales per 100,000 residents are down 5.6 percent from last year and remain about 20 percent below historical norms. The number of homes sold per 1,000 Realtors has fallen more than 22 percent below average, showing how competitive the brokerage side has become in this slower cycle.
For buyers, this is the most favorable environment in several years. They have more homes to choose from, sellers who are more flexible on price and terms, and more time to make decisions. Negotiations that include closing-cost credits or interest rate buydowns are becoming the norm, especially from builders who continue to use incentives to hold traffic steady.
For sellers, strategy and timing are crucial. With more than half of all listings already taking at least one price reduction, it is critical to price at or near the market value from the start. In neighborhoods where inventory has climbed above six months, aggressive pricing and property condition improvements are necessary to attract buyers. Homes that sit for extended periods risk falling behind as newer listings come on the market at more competitive prices.
For investors, the Austin housing market now presents a mix of near-term caution and long-term opportunity. Cash flow potential has improved as prices have come down while rental rates remain strong. For those focused on long-term holds, entering during a supply-heavy period typically provides the best basis once demand recovers. Short-term appreciation will likely remain limited through 2026, but long-term fundamentals for Austin remain strong given job growth, population inflow, and tech-sector stability.
The broader Austin housing forecast points to continued normalization through early 2026. Unless pending contracts rise or new listings slow down, inventory levels are expected to remain high. This could keep pressure on resale prices during the winter months. However, once mortgage rates ease or employment gains pick up again, absorption should strengthen, gradually restoring balance to the market.
Austin’s long-term track record shows resilience. Over the past 25 years, the market has averaged nearly 5 percent annual appreciation despite multiple cycles of correction and recovery. The current data suggests that Austin is in a period of cooling, not collapse. Buyers are now in control, sellers must price with precision, and agents who understand these dynamics will have the advantage heading into 2026.
