Austin Market Hits Critical Inventory Threshold as Buyer Demand Slows
The Austin-area housing market continues to experience a significant structural shift, driven by a combination of high inventory, tempered buyer demand, and sustained price corrections. As of June 2, 2025, there are 17,294 active residential listings across the Austin MLS—just 43 units below the all-time record set on May 26. This level of inventory represents an 11.5% increase over the previous peak from July 2024 and a stark 21.8% rise compared to the same week last year. The surge in active listings is being fueled by a steady influx of new inventory: 24,986 new listings have been added from January through May, up 8.5% year over year and 35.6% above the long-term historical average.
Despite strong listing activity, buyer absorption has not kept pace. Year-to-date pending sales total 18,924, which is 5.6% above the historical average but down 7.1% from the same point in 2024. The result is a 6,062-unit gap between new listings and pendings—the largest supply-demand imbalance recorded since 2004, when the gap reached 6,565. On a monthly basis, pending listings in May numbered just 4,777, nearly identical to May 2024’s 4,828, reflecting a -1.1% year-over-year change. These figures signal a market where supply is accelerating faster than demand can absorb it.
The New Listing to Pending Ratio, a key measure of market velocity, sits at just 0.57 for May and 0.66 year to date—well below the 25-year average of 0.81. In practical terms, this means that for every two new listings entering the market, only about one is going under contract. This imbalance is one of the clearest indicators of weakening buyer activity and contributes to growing inventory pressure. Months of Inventory has also continued to rise, now sitting at 6.19 months—up 20.4% from 5.14 in May 2024. This metric firmly confirms Austin’s placement in a buyer’s market, particularly as inventory levels remain elevated and transaction velocity declines.
The Activity Index, which tracks the percentage of active listings under contract, is currently at 21.6%, down from 24.9% one year ago. This 13% drop reflects a broad-based decline in absorption across the region. Cities such as Liberty Hill, Lago Vista, and Marble Falls are facing particularly high inventory pressure, with Months of Inventory approaching or exceeding 11 months. Even high-demand areas like Austin, Cedar Park, and Round Rock have seen notable increases in their local inventory metrics, reducing urgency and negotiating leverage for sellers.
Sales volume also continues to trend downward. A total of 2,737 homes closed in May 2025, bringing the cumulative year-to-date sales to 11,755—down 10.5% compared to the same period in 2024. While this figure is still 8.0% above the historical average, it underscores the extent of the slowdown from recent years. Adjusting for population, the market's sales density has declined to 462 closed transactions per 100,000 people, 20.1% below the long-term norm. Similarly, the number of homes sold per 1,000 licensed Realtors is just 632—24.8% below the historical average—indicating a more competitive environment for real estate professionals as well.
Price trends continue to reflect the prolonged market correction. The current median sold price in the Austin area is $450,000, down 18.18% from the May 2022 peak of $550,000. The average sold price now stands at $597,846, a 12.3% decline from its peak of $681,939—representing an $84,000 loss in average transaction value. When evaluated over a 36-month rolling window, the correction is even more pronounced, with median prices still showing an -18.18% deviation from three years prior. Based on Austin’s 25-year compound annual appreciation rate of 4.981%, it would take approximately 52 months—until August 2029—for median prices to return to the previous peak if current pricing truly represents the bottom.
Across all active listings, 52.2% have had at least one price drop, with many outlying cities such as Liberty Hill, Lago Vista, and Jarrell reporting price drop rates in excess of 55%. The prevalence of markdowns signals a market where sellers are having to respond to changing buyer expectations and competitive pressure from surrounding listings. Notably, lower-priced homes have seen greater declines: in a year-over-year comparison from June 2024 to June 2025, the bottom 25th percentile of home prices fell by 2.9%, while price per square foot in that same tier dropped 3.2%. In contrast, the top 25th percentile of the market experienced a 1.2% decline in price and a 2.4% decrease in $/sqft, indicating that luxury and higher-end properties are somewhat more insulated but not immune.
City-level appreciation data confirms the broader regional correction. Out of the 30 cities tracked, 18 have seen year-over-year declines in median sold price, while only 11 have experienced price gains. The Market Health Index (MHI), which aggregates price, sales, and inventory metrics into a single measure of market strength, now stands at 18.4%. This is well below the 30% level that typically marks a balanced market and strongly favors buyers. Meanwhile, the Inventory Stress Index (ISI), which evaluates how quickly new inventory is being absorbed, sits at just 5.6%. This low reading further highlights the slow pace of demand relative to new supply.
In conclusion, the Austin housing market as of June 2, 2025, is firmly in correction mode. Listings are growing at a record pace while pendings and closings remain flat or decline. Market velocity has slowed, leverage has shifted decisively to buyers, and pricing continues to soften across nearly every submarket. Sellers need to be aggressive with pricing and presentation to compete, while buyers are entering the most favorable environment seen in years—marked by broader selection, greater negotiation power, and easing prices. The question heading into the summer is whether demand will recover enough to stabilize these trends or whether Austin’s correction will deepen further.
At Team Price Real Estate, we monitor Austin’s market daily to deliver timely, hyperlocal insights that help our clients make confident decisions. With over 2,000 pages of up-to-date data spanning ZIP codes and cities, we bring clarity to a housing landscape that remains dynamic, imbalanced, and driven by numbers.
Scroll down to view the full Austin Daily Real Estate Briefing PDF for June 2, 2025.
