Austin Home Prices Drop 27% Since 2022 Peak After Inflation Adjustment

How Far Has Austin’s Housing Market Fallen? Understanding the Real Impact of the Price Correction

As of July 2025, the median home price in Austin stands at $440,000. This is a notable decline from the market peak in May 2022, when the median home price reached $550,000. On the surface, that represents a 20% nominal decline over a three-year period. But when adjusted for inflation using national CPI data, the decline becomes even more significant—dropping 27.5% in real terms.

Why does this matter? Because inflation quietly reduces the purchasing power of money over time. While many buyers and sellers focus only on the sticker price, real estate professionals and investors understand that evaluating inflation-adjusted prices is critical to understanding true market value. A $440,000 home today simply does not carry the same economic weight it did three years ago.

To fully understand the depth of this correction, we must look at both the nominal and real figures side by side. At the peak in May 2022, homes were selling for $550,000 with the Consumer Price Index (CPI) sitting at 292.3. As of July 2025, the CPI has climbed to 322.6. That shift means a buyer today needs more dollars to purchase the same value of goods—or in this case, housing—than they did three years ago. When we convert today’s $440,000 median price back into May 2022 dollars, its inflation-adjusted equivalent is just $398,716.

This $398,716 figure represents a 27.5% drop in real purchasing power since the peak. The nominal $110,000 drop is already substantial, but the real decline—$151,284 when adjusted for inflation—tells the fuller story. For homeowners who purchased near the top of the market, the decline in value is not just reflected on a balance sheet. It impacts their equity, refinance potential, and long-term wealth trajectory.

For prospective buyers, the current environment offers an opportunity. While high mortgage rates remain a hurdle, the inflation-adjusted discount in prices offers a substantial improvement in relative affordability compared to 2022. A home that might have felt out of reach three years ago is now within budget—not because prices have crashed dramatically, but because inflation has eroded their comparative value.

Sellers, on the other hand, must adjust expectations. Many who purchased before 2021 still hold equity gains, but those who bought between 2021 and mid-2022 are likely facing a different scenario. Pricing a home based on past comparable sales without accounting for inflation could lead to extended days on market and missed buyer interest. Understanding the true value trajectory is essential for proper pricing strategy.

For agents, this data is an essential tool for setting expectations. Whether advising a seller on listing strategy or guiding a buyer through negotiations, it’s important to frame the conversation not just in nominal terms, but also in real economic terms. When agents incorporate inflation-adjusted values into pricing conversations, they bring clarity and trust to the transaction.

Understanding the nominal and real declines side by side allows everyone—buyers, sellers, investors, and professionals—to evaluate the market from a more informed perspective. The difference between a 20% drop and a 27.5% drop is not just academic. It's the difference between a market correction and a wealth correction.

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FAQ: Austin Housing Market and Inflation-Adjusted Prices

1. How much have Austin home prices dropped since their peak?

Since the peak in May 2022, median home prices in Austin have dropped from $550,000 to $440,000, a 20% nominal decline. When adjusted for inflation, the real drop is approximately 27.5%, equating to a $151,284 decrease in real purchasing power.

2. Why is it important to adjust home prices for inflation?

Adjusting for inflation allows buyers and sellers to understand the true economic value of a home over time. Inflation erodes the purchasing power of money, so a $500,000 home today is not equal in value to a $500,000 home three years ago. Real values provide a more accurate picture of market trends and buyer affordability.

3. Are Austin home prices expected to keep falling?

While future pricing trends depend on interest rates, supply, and demand, current data suggests that much of the correction has already occurred. Nominal prices have leveled off, but in real terms, the market remains below peak values. Ongoing inflation and rate changes will continue to influence future pricing.

4. How does Austin’s price correction compare to other markets?

Austin's correction is among the steepest of major U.S. metro areas, largely due to its rapid appreciation during the pandemic. Many cities saw more modest declines, but few have experienced such a sharp real decline when adjusted for inflation. This makes Austin a standout case in national housing discussions.

5. What should sellers consider in a market with falling real prices?

Sellers should focus on current buyer affordability, not just past sale prices. Pricing a home based on market realities—factoring in inflation and shifting demand—is key to attracting serious offers. Overpricing based on outdated comparables can lead to longer time on market and potential price cuts.