Austin Housing Forecast: Luxury Home Prices Climb While $/SqFt Falls

Austin’s luxury segment is climbing in price, even as price-per-square-foot dips — here’s what’s driving it.

The latest Austin real estate data shows a sharp divide between the lower and upper ends of the market. The top 25th percentile — meaning the most expensive 25% of homes sold over the last month — saw a 4.0% increase in total sale price compared to last year, even as their average price per square foot fell 3.6%. This measure simply tells us where the high-end of the market begins and tracks how those homes are performing separately from the rest. In Austin, this tier represents the luxury market: larger custom builds, premium-location properties, and homes with extensive upgrades and amenities.

At the other end, the bottom 25th percentile — the least expensive quarter of homes sold — saw prices dip 0.6% year over year, with price per square foot down 3.9%. Entry-level buyers are still highly sensitive to payment size, and many sellers in this segment are making price adjustments or offering concessions to secure deals. Overall, total sales volume is down 11.8% from last August, meaning fewer closings across the board — but the high-end segment remains a standout.

Luxury prices climbing inside the city

In Austin proper, the top 25th percentile price rose from $820,000 in August 2024 to $890,061 in August 2025 — an 8.5% increase. However, the average price per square foot for this group fell from $422 to $404, a 4.2% drop. This is a classic “mix shift” effect: total prices climb because larger homes make up more of the luxury transactions, but price per square foot softens because square footage is rising faster than price.

Submarket standouts

Luxury demand is especially strong in lake-area markets. Lago Vista saw its high-end price jump from $600,000 to $850,000 year over year — a 41.7% gain — with $/SqFt up 5.9%. Lakeway, meanwhile, posted a modest 2.2% price decline but a 7.5% $/SqFt increase, showing that smaller, high-finish homes in prime locations are still in demand. Not all high-end markets are surging. Round Rock saw luxury prices fall 1.7% and $/SqFt drop 3.2%, suggesting a more balanced market where buyers have more negotiating room. Marble Falls had the largest percentage jump — nearly doubling — but with only 22 total sales, this is heavily skewed by a few big transactions.

Active listings set the luxury thresholds

Across the Austin metro, the 75th-percentile list price — the point where luxury begins — is $759,000, while the 90th-percentile is $1.29 million. Inside the city, those thresholds rise to $925,000 and $1.8 million. ZIP code breakdowns highlight the concentration of luxury inventory. In 78704, luxury entry begins at around $1.3 million and extends up to $2.7 million. In Westlake’s 78746, luxury entry is $2.58 million and the upper tier reaches $3.86 million, with top-end $/SqFt exceeding $1,100.

Buyer and seller takeaways

For buyers, this market offers leverage in the luxury tier: even as total prices rise, softer $/SqFt trends create room for negotiation on upgrades, closing costs, and timelines. For sellers in the luxury segment, presentation is critical. Move-in readiness, outdoor living spaces, and premium finishes can help justify a higher total price even when per-foot numbers are flatter. In the entry-level segment, affordability pressures are creating more choices for buyers but are forcing sellers to compete more aggressively on price and terms.

Bottom line for August 2025

Austin’s luxury segment is pushing total prices higher while per-foot prices soften, largely due to larger homes dominating the sales mix. The entry tier continues to face affordability headwinds, and overall market activity is down. Knowing exactly where your home sits in this distribution — whether in the high-end, middle, or entry level — is key to setting a strategy that works in today’s market.

FAQ

1. What does “top 25th percentile” mean in the Austin real estate market?

The top 25th percentile represents the most expensive 25% of homes sold in a given period. It’s a way of measuring the performance of the luxury segment separately from the rest of the market. This helps reveal trends that might be hidden when looking only at the median or average prices.

2. Why are luxury home prices rising while $/SqFt is falling?

Luxury price increases are being driven by larger homes making up a bigger share of sales. Total prices rise because these homes are more expensive overall, but the $/SqFt number can drop because the added square footage reduces the per-foot average. This is known as a “mix shift.”

3. Which areas of Austin are seeing the strongest luxury price growth?

Lago Vista and other lake-oriented markets are leading, with double-digit or even 40%+ increases in luxury-tier prices. Westlake and 78704 continue to see strong demand, though per-foot pricing varies by property size and amenities.

4. Is the high-end market affecting the median home price in Austin?

Yes. When more luxury homes sell, the median price can rise even if prices in the middle and lower segments are flat or declining. This is why percentile-based analysis is important — it shows whether price gains are broad-based or concentrated in one segment.

5. What’s the outlook for Austin’s luxury market in the coming months?

If current trends continue, the luxury segment could stay resilient through the fall, supported by well-funded buyers and lifestyle-driven moves. However, $/SqFt trends suggest that negotiation opportunities will remain, especially for buyers seeking upgrades or concessions.​

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