Market Overview
The Austin real estate market began the week with 17,609 active residential listings, representing a 14.7% increase compared to the same day in 2024. Notably, 59% of all active listings have experienced at least one price reduction, matching the highest percentage since September 2023. This aligns with the year’s ongoing trend of elevated inventory, with months of inventory now at 6.29 — a 15.7% increase year-over-year. While overall inventory growth signals more options for buyers, it continues to put downward pressure on absorption rates.
The new listing-to-pending ratio is a critical measure of market velocity. This week, the ratio sits at 0.55, meaning that for every 100 properties listed, only 55 are going under contract. Although this figure will rise as agents update MLS data, projections indicate it will land between 0.65 and 0.68, making it the lowest August figure since 2010.
Pending and Closed Sales Trends
Despite slower velocity, pending sales remain a bright spot compared to last year. Over the past three weeks, Austin has consistently outperformed 2024’s pending volume, reversing a long stretch of year-over-year declines. Year-to-date, cumulative pending transactions still trail 2024 by 10.4%, but the recent uptick suggests renewed buyer engagement.
Closings in July showed a 5.1% year-over-year increase in pending contracts, yet actual closed sales fell 8.7%. This discrepancy points to a higher fallout rate, likely due to financing challenges or inspection-related withdrawals. August closings are projected at 2,823 units — down 4.4% year-to-date, and when adjusted for population, this marks the second-lowest August since 2009.
Pricing and Market Segmentation
Price performance in Austin remains highly segmented. The top 25th percentile of sales — homes priced $641,000 and above — is up 3.5% year-over-year, with the City of Austin’s top tier up nearly 10%. By contrast, the bottom 25th percentile has declined 0.3%, with median prices around $329,000. This divergence underscores the bifurcated nature of the market: higher-end properties continue to attract competitive offers, while entry-level inventory faces the steepest resistance. Year-over-year, 19 of 30 tracked cities have posted median price declines. Hutto (-6.6%), Leander (-6.0%), and Burnet (-18.1%) show some of the sharpest drops, while Cedar Park remains one of the strongest performers.
Mortgage Rate Outlook
Rates remain a pivotal market driver. As of Monday morning, conventional rates held at 6.75% and VA loans at 6.25%, up 0.125% from last week. This week is packed with market-moving economic data, starting with Tuesday’s CPI report. A higher-than-expected inflation print could push rates toward 7%, while a favorable reading may allow modest relief, potentially down to 6.625%. The recommended approach for clients is a lock-and-float strategy: secure today’s rate to avoid sudden spikes, but retain the option to float down if rates improve before closing.
Builder Incentives and Market Creativity
Increased competition among builders is driving aggressive incentives. One notable promotion from Taylor Morrison offers zero interest payments for the first seven months on select FHA loans. Such offers highlight both the slowing pace of new construction absorption and the willingness of builders to deploy creative financing strategies to attract buyers.
Leasing Market Update
The lease market has hit a historic peak, with more active lease listings than at any other point in MLS history. This reflects both accidental landlords holding properties they cannot sell and investor-owned homes entering the rental pool. While furnished leases remain rare — likely under 3% of the market — the overall rental inventory continues to expand, potentially keeping rent growth in check.
