New Construction vs Resale: What's Fueling Austin's Market Correction?

Is New Construction to Blame for Austin’s Housing Market Correction? The Data Says Otherwise

In recent months, a growing number of headlines and conversations have pointed to new construction as the reason behind Austin’s housing market correction. The story suggests that builders are flooding the market with homes, overwhelming buyer demand, and forcing prices down. But when you examine the actual numbers, a different picture emerges—one that shows the correction is being driven by resale inventory, not new construction oversupply.

As of July 3, 2025, there are 4,121 active new construction listings across the Austin area. That is actually a slight decrease of 1% compared to this time last year, when there were 4,164 active new homes on the market. At the same time, resale inventory has increased significantly. There are now 13,558 active resale listings, a jump of 23% from the 11,018 active resale homes reported on July 4, 2024. This clearly shows that resale listings, not new builds, are responsible for the surge in available homes across the Austin market.

Pending contracts provide further insight into market conditions. Pending new construction sales have declined by 13.5% year-over-year, falling from 1,834 in July 2024 to 1,587 in July 2025. Resale pending sales are virtually flat, with a slight decrease of 0.6% over the same period. The declining pending activity for new homes reflects softening buyer demand across the board, rather than runaway builder activity.

The Activity Index, which measures buyer demand relative to available inventory, also tells an important story. New construction still outperforms resale in terms of market absorption. The current Activity Index for new construction stands at 27.80%, down from 30.58% a year ago. While this represents a 9.1% decline, it remains well above the resale Activity Index, which has fallen from 19.52% to 16.38% over the same period—a 16.1% drop.

When you line up these numbers side by side, the narrative that new construction is fueling the market correction loses credibility. Builders have actually pulled back slightly, with fewer active listings and declining pending sales. Meanwhile, resale homeowners have increased their listings significantly, adding to overall inventory levels and contributing to downward pressure on prices.

This pattern reflects a common dynamic in market corrections. When affordability weakens, driven by higher mortgage rates and economic uncertainty, buyer demand slows. Builders respond quickly to these shifts, adjusting production and incentives. In contrast, resale inventory tends to build up as existing homeowners list properties in response to changing market conditions, relocations, or financial pressure.

It is also important to recognize that even with the decline in new construction Activity Index, demand for new homes remains substantially stronger than resale. Buyers are still drawn to builder incentives, warranties, and the appeal of move-in-ready homes, especially when compared to aging resale properties that often require repairs or updates.

The Austin housing market is undoubtedly correcting, but it is inaccurate to place the blame squarely on new construction. The correction is being shaped by a combination of softening buyer demand, affordability challenges, and a sharp increase in resale listings. Understanding these dynamics is essential for buyers, sellers, and industry professionals as they navigate the evolving market landscape.

As always, relying on clear data rather than oversimplified headlines provides the most accurate perspective on where the Austin market stands—and where it is headed.

Frequently Asked Questions

Is new construction causing Austin’s housing market correction?

No, the latest data shows that new construction is not driving the correction. Active new home listings have actually declined by 1% year-over-year, while resale listings have increased by 23%. The increase in resale inventory is the primary factor behind the market's shift toward more balanced and buyer-friendly conditions.

Are builders oversupplying the Austin housing market?

The numbers do not support the idea of oversupply from builders. New construction active listings are down slightly from last year, and pending sales have declined by 13.5%, indicating that builders are adjusting to demand rather than flooding the market with homes. Resale inventory, not new construction, is contributing to the growth in total listings.

Why is resale inventory increasing so much in Austin?

Resale inventory is rising due to a combination of factors. Many homeowners are listing properties in response to market conditions, life changes, or financial pressure. Additionally, higher mortgage rates have slowed buyer demand, causing homes to sit on the market longer and contributing to the overall inventory buildup.

How does buyer demand compare for new construction versus resale homes?

New construction continues to outperform resale in terms of buyer demand. The Activity Index for new construction is currently 27.80%, significantly higher than the 16.38% Activity Index for resale homes. While both have seen demand soften, buyers remain more active in the new construction segment, likely due to builder incentives and the appeal of move-in-ready homes.

What does this mean for buyers and sellers in Austin?

Buyers have more options in the current market, particularly in the resale segment where inventory has increased significantly. However, new construction remains competitive, with builders offering incentives to attract buyers. Sellers, especially those with resale homes, should price competitively and be prepared for longer market times compared to the peak years.​