Is Austin’s Housing Market Crashing? A Look at National Concerns vs. Local Reality
As national media headlines grow louder—talking of zombie homes, stalled demand, and institutional investors pulling back—many in Austin are asking the same question: Is our local housing market following the same path? Here’s a breakdown of the major themes from the Fox Business segment and how they compare to what we’re seeing right now in the Austin real estate market.
1. "There Are More Sellers Than Buyers" – Is That True in Austin?
Yes, and the numbers leave no room for ambiguity. As of June 4, 2025, Austin has 17,163 active residential listings, just shy of the all-time record of 17,337 set in late May. This level of available inventory alone would suggest a shift in favor of buyers, but the depth of the imbalance becomes even clearer when we look at buyer engagement.
Team Price Real Estate tracks the Activity Index, a proprietary measure that compares the volume of pending listings to total active listings. A healthy, balanced market typically shows an Activity Index between 33–50%, depending on seasonality. As of the latest data, Austin’s Activity Index has dropped to 21.6%, well below historical norms. This means that less than one out of every five listings is going under contract in a given period, underscoring a major softening in buyer demand.
Supporting this, the New Listing to Pending Ratio for May 2025 is 0.58, with the 2025 year-to-date average at 0.66, significantly below the 25-year average of 0.81. This ratio further confirms that new inventory is arriving faster than buyers are absorbing it.
These metrics tell a cohesive story: Sellers are outpacing buyers at a time when affordability is strained, buyer confidence is weak, and price sensitivity is high. Price drops, longer days on market, and higher vacancy rates (56.3%) reinforce that the Austin market is firmly tilted in buyers’ favor—at least for now.
2. "Zombie Properties Are Growing Nationwide" – Is Austin Seeing This?
National headlines warn of “zombie homes”—properties that sit vacant and unsold—now estimated at 1.4 million across the U.S. While Austin doesn’t officially track zombie properties, the local picture tells a similar story. As of June 4, 2025, 56.3% of all active residential listings in Austin are vacant, a level that reflects homes sitting empty without occupants or rental income. This is not typical in a healthy market and suggests rising holding costs, seller urgency, and mounting supply-side pressure. Combined with the fact that 53% of listings have seen price reductions, it reinforces the broader concern that much of today’s inventory is stale, overpriced, or both—pushing the market deeper into correction territory.
3. "Homebuilders Are Cutting Prices to Move Inventory" – What About Austin Builders?
This absolutely tracks locally. Austin MLS shows 4,014 new construction homes listed, but the actual number is likely double that when factoring in off-market inventory. Among these, 48% have seen price reductions, and major builders like Brightland have reduced prices on 97 listings. Builder incentives are now the norm—not the exception—further impacting resale pricing.
4. "Affordability at a 40-Year Low" – What’s the Austin Snapshot?
Despite an 18.18% drop in the inflation-adjusted median sold price in Austin since May 2022, affordability remains near a 40-year low, and it’s important to understand why. According to Team Price Real Estate’s affordability model, the current monthly mortgage payment (PITI) for a median-priced home at $450,000 (with 20% down and a 30-year fixed rate of 6.82%) is $3,450. That figure is just below the 2022 peak of $3,767—but far above long-term averages.
More importantly, PITI now consumes 38.46% of the median household income, well beyond the traditional affordability threshold of 30%. In historical context, Austin’s PITI-to-income ratio hovered between 25% and 31% for most of the past two decades. The sharp spike began in 2021 and accelerated in 2022 due to surging home prices and interest rate hikes. In fact, the May 2022 ratio hit a record 47.19%, and although prices have corrected, rates remain elevated, keeping affordability strained.
To further illustrate, in 2019—before the pandemic-driven surge—monthly PITI was approximately $1,948, compared to $3,450 in May 2025. That’s a 77% increase in monthly payment burden in just six years, even though the nominal median home price has since come down. Wages in the Austin area have not kept pace, which explains why first-time buyers, move-up buyers, and even dual-income households are still struggling to qualify.
This affordability crisis has had a chilling effect on demand, reducing turnover in the resale market. Buyers who might have entered the market in prior cycles are now opting to stay in rentals or delay purchasing altogether. Until either mortgage rates drop significantly, incomes rise materially, or prices fall further, affordability will continue to be one of the biggest constraints on Austin's housing market recovery.
5. "Are We Headed for a Collapse?" – How Would Austin Know?
The term “collapse” in housing isn’t just a matter of opinion—it’s a data-defined condition. At Team Price Real Estate, we track both leading and lagging indicators daily to determine if a shift from correction to collapse is underway. Based on current metrics, Austin has not yet entered a collapse phase, but the conditions for one are present—and we would know if it does. To qualify as a housing collapse, we would expect two key triggers to persist:
A prolonged New Listing to Pending Ratio under 0.60 – This is the market’s leading indicator of demand. As of May 2025, Austin’s ratio is 0.58, and the year-to-date average is 0.66—both well below the 25-year norm of 0.81.
A peak-to-trough decline in median sold prices of 20–25%+ – This is the market’s lagging indicator. Austin’s current 3-year drawdown from May 2022’s $550,000 median to $450,000 in May 2025 is -18.18%, the sharpest on record, but not quite at full collapse territory.
Additional indicators support the depth of this correction. Inventory levels are at 17,163, just below the all-time high. Months of Inventory has reached 6.11, confirming a buyer’s market. 56.3% of listings are vacant, and 53% have price drops, signaling distressed sellers or overpriced listings struggling to compete—especially against builders offering aggressive incentives.
The last major correction in Austin occurred between 2008–2011, with a much milder price decline. Today’s drawdown is deeper and more prolonged. However, unlike the 2008 financial crisis, this downturn is not driven by subprime lending or foreclosure spikes but by affordability constraints, oversupply, and reduced buyer urgency due to high rates.
Bottom line: We’re not calling this a collapse—yet. But we’re watching closely. If the New Listing to Pending Ratio stays below 0.60 for another few months and the price decline deepens past 20%, we’ll be the first to identify the shift into collapse territory. Until then, Austin remains in the latter stages of a correction phase, with risks clearly skewed to the downside
FAQ: Austin Housing Market in Context
1. Is Austin in a housing crash?
Inventory in Austin is approaching unprecedented levels. As of June 4, 2025, there are 17,163 active residential listings, just shy of the all-time high of 17,337 reached on May 26. What’s especially noteworthy is that 56.3% of all active listings in Austin are vacant—a powerful signal that these homes are not owner-occupied or tenant-occupied and are sitting on the market without use. This increases carrying costs and adds urgency for sellers to drop prices or offer incentives. Historically, Austin averaged much lower vacancy in active inventory, especially during stronger market cycles. Additionally, 53% of all active listings show price reductions, indicating widespread softness and extended time on market. In short, today’s inventory is not only high in volume—it's also increasingly empty and price-sensitive.
2. Are Austin homebuilders cutting prices?
Yes—and aggressively. The MLS shows 4,014 active new construction listings, but off-MLS inventory from builders likely doubles that figure. In total, 48% of MLS-listed new construction homes have experienced price reductions, with some builders—like Brightland Homes—showing over 90 active listings with cuts. On top of that, builders are offering substantial incentives, including rate buydowns and closing cost assistance, to stimulate sales. This downward pressure from builders is forcing resale sellers to adjust prices accordingly to stay competitive.
3. How does current inventory in Austin compare historically?
Inventory in Austin is approaching unprecedented levels. As of June 4, 2025, there are 17,163 active residential listings, just shy of the all-time high of 17,337 reached on May 26, 2025. This figure represents a dramatic increase from inventory levels seen just a few years ago during the pandemic-era housing boom, when active listings fell below 3,000. Additionally, 53% of active listings currently show price reductions, a sign that listings are sitting longer and sellers are adjusting expectations in response to weak demand.
4. Why is affordability still a problem if prices have dropped?
Even with prices down, affordability remains at crisis levels. This is due to the triple pressure of high home prices, elevated mortgage rates, and stagnant wage growth. The median sold price in Austin is now $450,000, down from $550,000 in May 2022, but monthly payments remain high due to 7%+ mortgage rates. According to Team Price’s affordability models, Austin is near a 40-year low in affordability when combining home prices, rates, and income ratios. This keeps many would-be buyers on the sidelines, even with price cuts, reducing transaction volume and slowing recovery.
5. What should sellers in Austin do right now?
Sellers need to price strategically and act decisively. With record-high inventory and significant competition from builder inventory, listings that are overpriced or not move-in ready are likely to stagnate. Sellers should: Analyze current data in their ZIP code (Team Price updates this daily). Consider pricing below builder inventory when possible. Prepare for longer days on market and be flexible with concessions.
If you're not actively monitoring absorption rates and the New Listing to Pending Ratio in your area, you risk chasing the market downward. In a market like this, data and timing are everything.
Video Source: Fox Business – Charles Payne with Lance Lambert : See Video Below
