Austin Housing Market Update: Prices Fall Below Inflation-Adjusted Levels

Austin Housing Market Update: A Key Real-Price Reset Has Occurred

The Austin housing market has crossed an important threshold that reshapes how price movements should be understood going forward. Using April 2020 as a baseline and tracking both the nominal median sold price and the inflation-adjusted price path, Austin home prices have now fallen below their inflation-adjusted level. This marks a significant shift from the prior cycle and signals that the market has fully worked off the excess that built up after 2020.

From April 2020 through early 2022, Austin home prices rose far faster than inflation. That divergence reached its extreme in May 2022, when the median sold price peaked at approximately $550,000. At that point, prices were 51.9 percent higher than what inflation alone would justify when measured against the April 2020 baseline. This gap represented real price appreciation well beyond changes in purchasing power.

Since that peak, the market has undergone a sustained correction. As of January 2026, the median sold price stands at $407,950, while the inflation-adjusted price benchmark sits at $412,287. This means that, when adjusted for inflation, homes are now selling for slightly less than their April 2020 equivalent value. The entire real price premium accumulated during the post-2020 surge has been erased.

This shift is best understood through purchasing power rather than nominal price levels. While prices today remain well above their April 2020 dollar amount, inflation has materially changed the value of money over that period. When the inflation adjustment is applied consistently from the same starting point, the comparison shows that real home values have fully reverted to, and slightly below, their baseline trend.

The implication is not that prices have collapsed, but that excess has been removed. The market no longer reflects speculative overextension relative to inflation. Instead, pricing has realigned with underlying purchasing power, which historically tends to occur later in a market correction rather than at the beginning.

From a cycle perspective, this crossover often coincides with stabilization dynamics. When nominal prices converge with or undercut inflation-adjusted benchmarks, it suggests that affordability pressure has done much of its work. Sellers are no longer capturing real gains relative to recent history, and buyers are no longer competing against inflated price momentum driven by excess demand.

For homeowners who purchased near the peak, this also reframes expectations. In real terms, recent sellers are now giving back all gains achieved since April 2020. Even though nominal prices remain elevated compared to pre-2020 levels, the erosion of purchasing power means that those gains no longer translate into real appreciation.

For buyers, this environment represents a materially different market than the one that existed in 2021 and early 2022. Pricing today reflects normalization rather than acceleration. Negotiations, valuation discussions, and long-term planning are increasingly grounded in real value rather than momentum-driven expectations.

This reset does not guarantee immediate price increases or a rapid recovery. Instead, it establishes a new foundation. Markets tend to find balance only after excess is fully removed, and the data now shows that Austin has reached that point on an inflation-adjusted basis. Future price movements will depend on how supply, demand, and affordability interact from this reset level rather than from an inflated starting point.

The chart tracking median sold price against the inflation-adjusted price path makes this shift clear at a glance. What was once a wide gap favoring sellers has narrowed, closed, and now slightly reversed. That crossover is a meaningful market signal and an important piece of context for anyone evaluating Austin real estate today.

Frequently Asked Questions

Are Austin home prices still higher than they were in 2020?

Yes, in nominal dollar terms, prices are higher than in April 2020. However, once inflation is accounted for using April 2020 as the baseline, current prices are now slightly below their inflation-adjusted equivalent, meaning real purchasing power gains have been erased.

What does it mean when prices fall below inflation-adjusted levels?

It means that home prices have not kept pace with inflation over the measured period. In real terms, sellers are receiving less value than they would have if prices had simply tracked inflation since the baseline date.

Does this mean the Austin housing market has bottomed?

The data suggests that excess from the post-2020 surge has been fully removed, which often coincides with stabilization. However, this alone does not guarantee a definitive bottom, as future movement depends on supply, demand, and affordability dynamics.

How extreme was the 2022 price peak compared to inflation?

At the May 2022 peak, Austin’s median sold price was approximately 51.9 percent above its inflation-adjusted value using April 2020 as the starting point. This represented a significant real price premium.

Why is purchasing power a better lens than nominal prices?

Nominal prices do not account for changes in the value of money over time. Inflation-adjusted analysis provides a clearer picture of real value, affordability, and whether price gains represent true appreciation or simply reflect inflation.