Austin Real Estate Market Update: Monday Touch Point – September 16, 2024

Austin Real Estate Market: Analyzing the New Listing to Pending Ratio

September 16, 2024 : The Austin real estate market has seen significant fluctuations throughout 2024, and one of the key indicators to track its health is the New Listing to Pending Ratio. This ratio provides a snapshot of market activity by comparing the number of new listings that enter the market to those that move into a pending status, representing homes that are under contract but not yet closed. As of September 16, 2024, the current New Listing to Pending Ratio sits at 0.54, reflecting an ongoing trend of more homes being listed than moving into a pending status, a pattern we've seen consistently throughout the year.

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Year-Over-Year Comparison

A closer look at the year-over-year comparison reveals that the ratio in September 2024 (0.54) is notably lower than the ratio during the same period in 2023, which stood at 0.81. This marks a decline in the pace at which homes are going under contract compared to the number of new listings coming to the market. While the number of homes entering the market has not changed drastically, the slowing pending sales suggest either a cooling buyer demand or possibly longer negotiation periods. Weekly data offers further insights. For example, from September 9 to September 16, 2024, 1,003 new listings were added to the market, while only 649 properties moved to pending status. This imbalance has contributed to the declining ratio, signaling a potential shift toward a buyer's market as inventory begins to outpace demand. In comparison, the same week in 2023 showed a healthier balance, with 952 new listings and 817 pending properties.

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Mortgage Rates and Market Impact

Mortgage rates have played a substantial role in shaping market activity. The current average mortgage rate stands at 6.20%, up slightly from last month but down from earlier highs of over 7%. These higher borrowing costs have been a barrier for many potential buyers, suppressing demand and contributing to the growing inventory. However, as mortgage rates show signs of stabilization, we may see an uptick in pending contracts as buyers adjust to the new norm.

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Price Drops Versus Increases

Another key factor influencing the market is the price drop to price increase ratio, which currently sits at 92%. This means that for every price increase in a listing, there are significantly more price drops, reflecting sellers' willingness to make concessions in order to attract buyers. A high percentage of price drops is often a signal that sellers are facing a more competitive environment where buyers are becoming more selective, and pricing strategies are more crucial than ever.

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Market Shifts and Open House Activity

One of the most telling signs of market sentiment is the level of open house activity. As of mid-September, there were around 3,000 open house offerings each week, indicating strong seller engagement in showcasing properties. However, despite these efforts, the shift in the New Listing to Pending Ratio suggests that buyers are either holding off on making decisions or encountering affordability challenges that prevent them from moving forward.

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Residential Market Performance

A breakdown of monthly residential data supports the narrative of a cooling market. From August to September 2024, the number of new listings dropped from 3,933 to 1,897, a steep decline of over 50%. Despite this, the number of pending properties also saw a significant reduction, from 3,500 in August to just 1,426 in September. The sharp reduction in pending contracts highlights the hesitancy among buyers, possibly due to the combination of higher interest rates and home prices. Additionally, the gap between new and pending listings is growing. In September 2024, there were 853 more new listings than pending properties, a stark contrast to earlier in the year when the difference was less pronounced. The growing inventory provides buyers with more options but also forces sellers to be more competitive, as reflected in the price drops across the market.

What’s Next for the Austin Market? 

The Austin real estate market remains in a period of transition. With the New Listing to Pending Ratio below 1.0, it's clear that supply is outpacing demand, at least for the time being. However, with interest rates showing signs of stabilizing and sellers adjusting their pricing strategies, there is potential for the market to regain its equilibrium. If mortgage rates decrease slightly or if buyers become more accustomed to current conditions, we could see an increase in pending contracts and a tighter ratio in the months ahead.

For now, the market presents opportunities for both buyers and sellers. Buyers benefit from more choices and negotiating power, while sellers who are willing to be flexible with pricing may still be able to secure deals. As always, monitoring key indicators like the New Listing to Pending Ratio will be essential for understanding market dynamics as we move into the final months of 2024.