Austin real estate is showing its strongest third-quarter recovery in demand since the correction began, with pending sales up year over year and the city’s Activity Index showing improvements this month.
The Austin housing market is entering late August with renewed energy, reflecting a shift in buyer activity that has been slowly building throughout the summer. Pending contracts have posted single-digit year-over-year gains for the entire month, signaling that more buyers are stepping off the sidelines. At the same time, the City of Austin’s Activity Index—measuring the balance between pending sales and active inventory—is showing improvement this month. This suggests that while inventory remains elevated, demand is stabilizing and beginning to catch up. For buyers, sellers, investors, and agents, this creates a different landscape than what we saw earlier in 2025, when supply was building faster than demand could absorb.
Active Listings and Price Adjustments
As of August 25, there are 17,424 active residential listings across the Austin-area MLS. This is down slightly from the peak of 18,146 in late June, but still 14.9% higher than this time last year, when there were 15,160 homes available. More than half of those listings—59.2%—have seen at least one price reduction. This widespread repricing shows that sellers are still adjusting to current market realities and that buyers hold negotiating leverage. Compared to historical trends, today’s inventory reflects both strong new listing activity and slower absorption.
For context, cumulative new listings year-to-date have reached 36,992, which is 4.2% higher than last year and 23.1% above the long-term average. Builders continue to play a large role in supply, with new construction representing 27.3% of active inventory. Resale homes are moving more slowly, with a resale Activity Index of just 16.7%, compared to 27.3% for new builds. This divide underscores how incentives and pricing flexibility from builders are shaping buyer choices.
Pending Sales and Demand Recovery
Pending sales stand at 4,260 compared to 4,068 at this time in 2024—a 4.7% increase. While modest, this growth is significant because it reverses the declines seen for much of the past year. Year-to-date pending contracts total 29,995, which is down 4.8% from 2024 but still 2.7% above the long-term average. In other words, while 2025 has not fully matched last year’s contract pace, activity is still above historical norms. This balance points to a market that is cooling from its pandemic-era highs but avoiding a collapse.
The monthly new listing-to-pending ratio sits at 0.69, below the 25-year average of 0.82. This means that for every 100 homes hitting the market, only about 69 are going under contract in the same period. However, that gap is narrowing compared to earlier this year, signaling improvement in absorption.
Months of Inventory and Market Balance
Months of Inventory now measures 6.22, compared to 5.38 one year ago. That’s a 15.5% increase in available supply relative to the pace of sales. The long-term takeaway is that buyers continue to hold the upper hand, but sellers are beginning to see slightly more traction. In the City of Austin specifically, inventory has risen 10.7% year over year and 24.5% since January. These levels push conditions deeper into buyer’s market territory, though improved pending activity suggests that excess supply may start to normalize if demand holds steady into the fall.
For sellers, this environment requires precision in pricing and presentation. With nearly 60% of listings experiencing price cuts, those who list at market value from the start are more likely to attract the early wave of showings. For buyers, the leverage remains in place, with plenty of options to compare and negotiate.
Closed Sales and Market Flow
August sales density—measured as closings per 100,000 population—remains below average. Year-to-date, 20,506 homes have sold, which is down 4.9% compared to 2024 but still 5.9% above the long-term average. When adjusting for population growth, however, the slowdown is clear: cumulative sold homes per 100,000 residents is 803, which is 21.9% below the historical norm. Per-Realtor productivity is also low, with only 1,099 closings per 1,000 agents year-to-date, down 25.6% from average. This highlights the competitive environment among agents and the importance of market expertise.
The Market Flow Score (MFS) stands at 2.63 on a 0–10 scale, far below the historical average of 6.59. Similarly, the absorption rate—the ratio of sold to active listings—is just 11.3%, compared to a long-term norm of 31.8%. These measures show that despite a modest rebound in demand, Austin housing is still operating in a supply-heavy environment.
Pricing Trends and Long-Term Forecast
The average sold price across the Austin market is $605,607, down 11.2% from the May 2022 peak of $681,939. The median price is $460,000, which represents a 16.4% decline from the peak median of $550,000 in May 2022. Compared to three years ago, today’s median sits 7.3% lower, reflecting the impact of the correction.
Looking forward, Austin’s 25-year compound appreciation rate of 5.07% provides a roadmap for recovery. If the market has indeed reached its price bottom at $460,000, then applying historical appreciation rates suggests it would take roughly 46 months—into mid-2029—for median prices to return to peak values near $551,000. While no forecast is certain, this trajectory gives both buyers and investors context for long-term planning. For sellers, it emphasizes the reality that a quick return to record prices is unlikely; instead, recovery will be gradual.
Segment Trends: High vs. Low Price Points
Performance by price tier tells an important story. The bottom 25% of the market has seen little change in overall prices year over year, down just 0.5%, but with a 3.9% decline in price per square foot. The top 25% of the market has performed better, with a 6.5% increase in overall prices, though square-foot values dipped slightly. This split suggests that higher-end properties are regaining momentum while entry-level buyers remain more constrained by affordability challenges and lending standards.
Across the region, 12 cities show year-over-year price gains while 18 have declined. This uneven pattern demonstrates that while Austin as a whole is stabilizing, local conditions vary widely. Markets like Leander, Liberty Hill, and Georgetown continue to carry significant inventory, while areas closer to central Austin show more balance.
What It Means for Buyers, Sellers, and Investors
For buyers, the current market still offers leverage. With more than half of listings experiencing price cuts, negotiations remain favorable. However, the recent uptick in pending contracts shows that competition is re-emerging, especially in desirable neighborhoods and price ranges. Acting decisively when the right home appears may be necessary.
For sellers, the message is clear: overpricing leads to extended days on market and eventual reductions. Listing competitively from the start is the best strategy in today’s Austin housing market. Homes that are priced correctly and well-presented are still selling, even amid broader inventory challenges.
For investors, the market offers both risk and opportunity. On one hand, low absorption rates highlight ongoing supply pressure. On the other, current prices represent double-digit discounts from the peak, positioning long-term buyers to benefit from eventual appreciation. Given the 25-year average growth rate, patient investors may view this as an attractive entry point.
For agents, this environment requires both data-driven advice and relationship stewardship. The market is complex, and guiding clients through it successfully demands a clear understanding of how today’s numbers compare to history.
Conclusion
The Austin housing forecast for late summer 2025 is cautiously optimistic. The combination of rising pending contracts, a stabilizing Activity Index, and modest year-over-year gains in demand point toward a market that may be bottoming out. At the same time, elevated inventory, widespread price cuts, and below-average absorption remind us that recovery will be slow. Whether you are buying, selling, or investing, success in this market depends on careful timing, realistic expectations, and reliance on data over emotion.
Scroll down to view the full Austin Daily Real Estate Briefing PDF for August 25, 2025.
