Austin Housing Market Cooling as Fewer Homes Go Under Contract

Homes Sitting Longer: Buyer Demand Drops in Austin Housing Market

In May 2025, the Austin real estate market reached a milestone that underscores a significant shift in buyer behavior. The number of homes listed for sale exceeded the number of pending contracts by 12,948—a 20-year high. This growing imbalance signals a sharp cooling in buyer demand, with many homes now sitting on the market longer and fewer going under contract.

Just four years ago, in May 2021, Austin’s housing market was in a frenzy. There were actually more homes under contract than actively for sale, with a negative gap of –3,100 listings. By May 2022, that trend had reversed, and the market showed 987 more active than pending listings. In 2023, the gap increased to 5,889. In 2024, it climbed again to 9,060. Now, in 2025, the 12,948 difference marks the largest such figure in the last two decades.

This year-over-year trend shows no sign of slowing. From May 2022 to May 2023, the gap grew by 4,902 listings—a 496.7% increase. From 2023 to 2024, it widened another 3,171 listings, and from 2024 to 2025, it rose by 3,888 more, a 42.9% increase year-over-year. Since 2021, the market has added a net difference of 16,048 between active and pending listings, translating to a 518.6% overall shift.

This shift means homes are staying on the market longer, which affects how both buyers and sellers approach real estate transactions. For sellers, pricing strategies must now account for increased competition and slower buyer response. For buyers, the environment offers more choices and often more negotiating power, especially with over half of current listings experiencing price drops.

The current imbalance is the widest since the post-recession years. In 2010, during the aftermath of the housing crash, the May gap between actives and pendings reached 10,890. The May 2025 figure of 12,948 has now surpassed that level, without the same kind of foreclosure surge. Instead, it appears this is driven more by affordability challenges, elevated mortgage rates, and buyer hesitancy than by forced selling.

This growing divergence also pushes other market indicators. The Months of Inventory figure continues to climb, shifting the market further toward buyer-friendly conditions. The longer homes sit without offers, the more downward pressure builds on price, absorption rate, and confidence in the market.

As the summer continues, market watchers will be tracking whether pending sales rebound or if Austin continues to add to its already high active inventory. For now, the data clearly shows that buyer demand has cooled, and the market is responding accordingly.

FAQ – Austin Market Cooling, May 2025

Q1: Why are so many homes sitting on the market in Austin right now?

As of May 2025, more than 12,900 homes are listed for sale than are under contract. This gap suggests that buyer demand has slowed, likely due to high mortgage rates, affordability concerns, and shifting market confidence. When buyers hesitate, inventory builds up, causing homes to sit longer before going under contract.

Q2: What does it mean when pending sales drop compared to active listings?

When the number of pending home sales declines while active listings increase, it means the market is cooling. Fewer homes are going under contract, and more remain available. This indicates that buyers are either delaying purchases or unable to afford current prices, leading to longer days on market and potential price reductions.

Q3: Is this the largest gap between active and pending listings in Austin history?

Yes, the May 2025 figure of 12,948 is the largest gap between active listings and pending contracts recorded in at least the past 20 years. It surpasses the previous high from May 2010, when the post-recession market showed a similar inventory buildup with 10,890 more active than pending homes.

Q4: What should sellers do in a cooling housing market like this?

Sellers should price homes competitively, prepare for longer marketing periods, and consider offering buyer incentives. With more homes on the market and fewer buyers making offers, accurate pricing and strong property presentation are key to attracting serious buyers in today’s conditions.

Q5: How does a buyer’s market affect home prices in Austin?

In a buyer’s market—where there are more homes for sale than there are buyers—sellers often reduce prices to stay competitive. This can lead to downward pressure on home values, especially when inventory is high and demand continues to soften. Buyers can benefit from better deals and negotiation leverage.