Austin Real Estate Market Update – August 27, 2025

The Austin housing market is caught between rising supply and sluggish demand, creating one of the most uneven markets the city has seen in years.

Today’s update shows 17,293 active residential listings, just shy of the late-June high of 18,146. This marks a 15.5% increase in available homes compared to August 2024, when inventory sat at 14,976. Importantly, 59.2% of those listings have already experienced at least one price drop, a clear signal that sellers are adjusting expectations in response to slower buyer activity.

From a historical standpoint, Austin’s housing supply remains elevated. New listings year-to-date through August reached 37,212, which is not only up 4.9% from last year but also 23.8% above the long-term average. In other words, the pipeline of new homes continues to build, and it is outpacing demand. Pending sales stand at 4,279 this August compared to 4,090 a year ago, a 4.6% gain, but cumulative pending contracts year-to-date are still down 3.7% from 2024.

This imbalance is reflected in the Activity Index, which measures the pace of transactions relative to supply. The index currently sits at 19.8%, compared to 21.5% last year. That 7.5% decline may not sound dramatic at first, but it represents a meaningful shift when scaled across thousands of properties. A stronger market would typically show activity above 25%, with the current levels pointing toward a supply-heavy environment.

Inventory Pressure and Months of Supply

The months of inventory metric illustrates this imbalance even more clearly. At 6.15 months, Austin now has a 16% increase over last year’s 5.30 months. Historically, six months has been considered the threshold between a seller’s and buyer’s market. Austin crossing into this territory reinforces what many buyers are already sensing: they have leverage.

Regional breakdowns tell the same story. Cities such as Georgetown, Leander, and Liberty Hill have seen inventory nearly double year-over-year, while Austin itself has risen from 4.90 months in August 2024 to 5.37 months today, a 9.7% increase.

What does this mean for sellers? Homes no longer disappear from the market in a matter of days. Instead, properties are lingering, prompting aggressive pricing adjustments. For buyers, this provides room to negotiate concessions, price reductions, and closing credits that were virtually unheard of during the 2020–2022 boom.

Sales Volume and Market Flow

Closed sales are trending softer. Austin recorded 2,759 sold properties this month, bringing the year-to-date total to 20,597. That’s 4.5% fewer than last year, though still 6.4% above long-term averages. Looking at demand relative to population and Realtor count tells a more concerning story: per-capita sales are 21.5% below average, while sales per 1,000 Realtors are 25.3% below average. These numbers confirm what many industry professionals feel — there are too many agents chasing too few transactions.

Absorption rates and Market Flow Scores underscore this cooling. The current absorption rate sits at 12.7%, less than half the historical norm of 31.8%. Similarly, the Market Flow Score is just 3.43, compared to a historical average of 6.59. Both metrics highlight a sluggish environment where listings pile up faster than buyers can absorb them.

Prices and Long-Term Trends

On the pricing side, the story is one of decline from the pandemic highs but stabilization over the past year. The average sold price is $596,353, down 12.6% from the May 2022 peak of $681,939. The median sold price is $450,000, a full $100,000 or 18.2% below the May 2022 peak of $550,000.

For perspective, this reset has erased much of the froth from the COVID-era run-up. Today’s median price is also 9.3% lower than it was three years ago, marking one of the few times in Austin’s modern history when rolling three-year comparisons show declines.

Looking ahead, history suggests that appreciation will return, but it will take time. Austin’s 25-year compound appreciation rate is 4.981% annually. If the current $450,000 median represents the market bottom, it would take roughly 52 months (until late 2029) for prices to recover back to $550,000 under normal growth conditions. That’s a sobering reminder for investors and homeowners alike that markets do not rebound overnight.

Market Segmentation: High-End vs Entry-Level

Interestingly, the market is bifurcated. High-end homes (top 25th percentile) have gained 7.3% year-over-year, while the bottom quartile has declined 1.2%. Entry-level homes are also seeing sharper declines in price per square foot, down more than 3% in the lower quartile, compared to less than 1% among luxury properties.

This divergence reflects affordability constraints. Higher-income buyers remain active, often insulated from rate fluctuations, while first-time buyers struggle with higher mortgage costs. For agents, this means strategies must adjust — luxury listings may still generate competitive interest, while mid-market and starter homes face resistance without significant price cuts.

Buyer, Seller, and Investor Takeaways

For buyers, this is a favorable environment. The combination of high inventory, widespread price drops, and longer market times means negotiation power is firmly in their hands. For those who were sidelined during the frenzy of 2021 and 2022, this is the first real opportunity in years to shop with patience and choice.

For sellers, the message is clear: price competitively from the start. Overpricing and hoping the market will catch up is no longer a winning strategy. With nearly 60% of homes requiring price drops, the data shows that buyers simply won’t engage with unrealistic asking prices.

For investors, the current cycle presents both risk and opportunity. Cash buyers or those with long-term horizons may benefit from acquiring assets while the market is soft. However, investors reliant on financing must carefully weigh rental yields against today’s higher borrowing costs and the potential for values to remain flat for several years.

For agents, the challenge is differentiation. With transaction volume down per capita, success will depend on capturing market share rather than relying on overall market growth. Agents who can guide clients with clear data, set realistic expectations, and highlight opportunities in a shifting environment will stand out.

Conclusion

The Austin housing market is in transition. Supply continues to grow while demand lags, leading to longer times on market, widespread price drops, and softer absorption. Prices remain below their 2022 peaks, and recovery is projected to take several years. Buyers have gained leverage, sellers must reset expectations, and agents must navigate a market where the system rewards preparation and data-driven strategies.

Scroll down to view the full Austin Daily Real Estate Briefing PDF for August 27, 2025.

Embedded PDF: Austin Daily Real Estate Briefing for August 27, 2025 — includes updated statistics on inventory, pricing, buyer demand, and market trends across the Austin area.

FAQs

1. What is driving the increase in active listings in Austin real estate right now?

Active listings are up 15.5% year-over-year, with 17,293 homes on the market compared to 14,976 last August. This growth comes from a steady flow of new listings, totaling 37,212 year-to-date — nearly 24% above the long-term average. Sellers continue to list homes, but demand has not kept pace, resulting in more properties sitting on the market and nearly 60% of them requiring price reductions.

2. How do today’s prices compare to Austin’s housing peak in 2022?

The current median sold price is $450,000, down 18% from the May 2022 peak of $550,000. The average sold price has also dropped about 12.6% from the peak. This decline represents a significant reset after years of rapid appreciation. While this is challenging for sellers, it offers buyers and investors opportunities at lower entry points compared to the overheated conditions of just three years ago.

3. What does the Activity Index mean for the Austin housing forecast?

The Activity Index, now at 19.8%, measures how active buyers are relative to the amount of inventory. This is lower than last year’s 21.5% and well below the 25%+ levels seen in stronger markets. The drop shows buyers are moving more cautiously, and it aligns with the increase in months of inventory to 6.15. Both metrics suggest that Austin is firmly in a buyer-friendly market, with conditions expected to remain soft until demand strengthens.

4. How long will it take for Austin home prices to recover?

Using Austin’s historical 25-year annual appreciation rate of 4.981%, if the current $450,000 median price represents the market bottom, it would take about 52 months — or until late 2029 — for values to return to their 2022 peak of $550,000. Recovery depends on both economic conditions and buyer demand, but historically, Austin has always trended upward over the long term. Investors and homeowners should plan for gradual, not immediate, price rebounds.

5. Is now a good time to buy in Austin housing?

For buyers who were frustrated by the hyper-competitive market of 2020–2022, today offers a rare opportunity. High inventory, widespread price reductions, and more favorable negotiation terms make this a buyer-friendly market. While prices may not skyrocket anytime soon, purchasing in a market trough can be a long-term advantage, especially for those planning to hold property beyond the next few years.

Have a Question or Want to Dive Deeper?

If you’d like a custom breakdown of the data, want help interpreting today’s market trends, or just have a question about buying or selling in Austin, let us know. Fill out the form below and a member of our team will get back to you promptly.