Austin’s Housing Market Crossroads: Supply Swells, Buyer Demand Retreats

The June 19, 2025 edition of the Austin Daily Real Estate Briefing paints a picture of a housing market caught in a rare phase of prolonged imbalance. Inventory levels remain historically elevated, buyer activity continues to soften, and key metrics suggest that this correction cycle, which began in mid-2022, is still underway. For buyers, the market is increasingly offering opportunities. For sellers, the pressure to compete on price and terms has intensified.

Austin’s active residential listings now total 17,681, just below the record high of 17,750 set on June 16. This marks a significant jump from last summer’s inventory peak of 15,503 and reflects a clear oversupply situation. Compounding the issue is the fact that 55.2% of all active listings have experienced at least one price drop. This level of repricing is a visible marker of seller response to slower buyer demand and higher borrowing costs. In Austin proper, there are 5,645 homes on the market, with a slightly higher percentage of price reductions compared to the regional average. Suburban communities like Georgetown, Leander, and Round Rock are also feeling the pressure, each showing elevated inventory and a similar pace of markdowns.

Demand continues to lag behind historical norms. The Activity Index, which measures the percentage of listings that are under contract, has dropped to 20.6%. Just one year ago in June 2024, the index stood at 24.5%, representing a 16.1% year-over-year decline. In markets with stronger performance, such as Hutto, Buda, and Kyle, the index ranges from 30 to 33 percent, but these remain exceptions rather than the rule. With most major cities falling well below a healthy balance, buyer activity is simply not keeping up with new inventory flow.

This decoupling is also seen in the Monthly New Listing to Pending Ratio, currently sitting at 0.59. The historical 25-year average for this ratio is 0.81, which places today’s number significantly below trend. It signals that for every 100 homes listed, only 59 are going under contract, and that sellers are finding it harder to convert listings into pending transactions. This sustained imbalance is pushing months of inventory higher.

The current Months of Inventory reading for the region is 6.26, compared to 5.26 a year earlier—a 19 percent increase. Most of the major suburban markets have crossed the six-month mark, and some smaller towns and outlying cities like Marble Falls and Spicewood are now at 11 months of inventory, clearly in buyer market territory. In Austin itself, MOI has climbed to 5.86, a 34.4% year-to-date increase that confirms a full shift away from the pandemic-era seller's market. Liberty Hill is at 5.56, Lakeway is at 6.95, and Georgetown at 4.82, all pointing to a cooling environment where buyers have time, options, and leverage.

The gap between new listings and pending contracts is now the widest it has been since 2004. As of mid-June 2025, there have been 27,920 new residential listings across the Austin area. This figure is 24.2% above the long-term average and represents a 1.2% increase over last year. In contrast, pending sales are down 12.1% year-over-year, totaling only 21,278 through the same timeframe. The result is a cumulative supply-demand gap of 6,642 listings—the highest seen since 2004 when the gap reached 7,383. Such a large discrepancy between homes listed and homes placed under contract indicates that the Austin market is not merely correcting—it is undergoing structural realignment.

Prices continue their downward trajectory, confirming that the market is still in the midst of a correction cycle that began in mid-2022. The median sold price now stands at $464,120. That’s down 15.6% from the May 2022 peak of $550,000. The average sold price is $602,517, down from a high of $681,939—an 11.7% decline. On a longer horizon, tracking the median price relative to 36 months prior shows a 13.25% decline. While this may suggest that the market is nearing bottom, historical modeling indicates that a full recovery to peak prices will not be quick. Using a 25-year compound appreciation rate of 5.11%, a return to the $550,000 median peak would take roughly 43 months—placing the recovery in December 2028.

Sales volume reflects both affordability constraints and buyer hesitation. There were 2,749 home sales recorded in June 2025, bringing the year-to-date total to 14,890. This is 7.7% above the historical average, but still 6.8% below the pace of 2024. When adjusting for population and agent headcount, the slowdown becomes more pronounced. Sales per 100,000 residents are down 20.4% compared to average, and the number of homes sold per 1,000 active Realtors has dropped 24.5% below the long-term trend, reaching just 801. These figures suggest that while homes are still selling, they are doing so at a pace that is insufficient to counterbalance the volume of new listings entering the market.

Two composite indicators further illustrate the current conditions. The Market Health Index is now at 20.1%. Since values below 30% signify a buyer’s market, this index confirms the broader shift in dynamics. Meanwhile, the Inventory Stress Index remains at 7.1%, which is considered a low reading. This suggests that inventory growth is not due to rapid forced listings or panic, but rather the result of a mismatch between seller supply and buyer readiness.

Taken together, these metrics confirm that Austin is now in a definitive correction phase with no immediate signs of reversal. The elevated inventory, low absorption rate, and slowing price trend reflect a cooling cycle still in motion. For buyers, this offers a chance to negotiate better terms, avoid bidding wars, and potentially lock in properties that were out of reach just two years ago. For sellers, especially those who purchased near the peak, strategic pricing and patience will be essential.

Scroll down to view the full Austin Daily Real Estate Briefing PDF for June 19, 2025.