Austin Housing Market Hits Turning Point: Luxury Prices Now Falling

Market Update: Austin Prices May Decline as Luxury Segment Turns Negative

As of mid-May 2025, the Austin housing market is experiencing a pivotal shift that may mark the beginning of a broader price correction. Market data through May 15 shows record-high pricing levels, with the average sold price reaching $623,046 and the median sold price at $475,000. Year-over-year, these represent increases of 4.9% and 4.4%, respectively, compared to May 2024. On the surface, this suggests strong appreciation—but a deeper look reveals a change that could reverse this trend in the second half of the month.

Until now, the market had remained bifurcated, with the upper 25th percentile of sold homes (high-end properties) continuing to rise in value, while the lower 25th percentile (entry-level properties) showed declines. This pricing imbalance propped up the overall average and median prices, creating the illusion of a resilient market. Data from May 1, 2025, confirmed this bifurcation: high-end median prices were up 2.2%, while the bottom 25th percentile had declined 2.9% year-over-year.

However, data released today, May 15, reveals that the bifurcation has collapsed. For the first time in this cycle, both top and bottom quartiles have turned negative. High-end home prices are now down 1.4% in median price and 1.7% in price per square foot. The bottom quartile continues to decline, falling 3.5% in median price and 3.1% in price per square foot. This simultaneous drop across both segments signals a synchronized downturn in pricing across the board.

What makes this development so consequential is the timing. The first half of May was buoyed by closings based on April contracts, when the luxury market was still showing relative strength. Now that the top tier has turned negative, upcoming closings for the latter half of May will reflect transactions under new pricing pressure. If the current trend holds for the next two weeks, the month-end average and median prices are likely to decline, reversing the current year-over-year gains.

The current market cycle data shows a significant sales slowdown despite the temporary pricing bump. May 2025 sales volume (through May 15) stands at 2,958 units, up 16.4% month-over-month but down 8.3% year-over-year. This combination of falling demand and rising inventory puts additional pressure on sellers, especially at higher price points, where the pricing power had previously been concentrated.

The broader trend is clear: the structural support that kept prices stable despite declining transaction volume—namely, strength in the high-end market—is no longer present. As both the top and bottom quartiles post negative year-over-year changes, median and average prices will no longer be artificially buoyed. This transition marks the beginning of what could be a visible and measurable market-wide price correction in Austin.

As of today, the market remains technically higher than the same time last year, but a pivot point has been reached. For buyers, this may suggest more negotiation leverage in coming weeks. For sellers, particularly those in higher-priced segments, pricing strategy will become increasingly sensitive to emerging trends. If current conditions persist, the final May 2025 numbers may end up flat or negative, reflecting the new reality of synchronized price movement across all housing segments. ​