Austin housing continues to test its balance as inventory rises and affordability challenges shape the fall market.
The Austin real estate market is heading deeper into September with clear signals of shifting supply and demand dynamics. Active residential listings now stand at 16,925, up 16.2% from the same time last year when 14,568 homes were on the market. Although this is below the recent high of 18,146 reached in June 2025, it reflects a market where inventory remains elevated compared to historical standards. For buyers, this increase translates into more choices and stronger negotiating leverage. For sellers, it underscores the need to remain competitive with pricing and concessions to capture attention in a slower-moving environment.
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Price reductions are a central theme in today’s housing landscape. Across the Austin MLS, 58.2% of active listings have already seen at least one price drop. This figure is far higher than in balanced markets, where reductions tend to hover in the 30–35% range. The elevated share of price cuts confirms that sellers are adjusting to softer demand and buyer resistance to earlier, higher price points. For anyone tracking the Austin housing forecast, this is one of the clearest signs that the market is still in correction mode, even as long-term fundamentals remain strong.
Pending contracts highlight the demand challenge. Year-over-year, pending listings are essentially flat, with 4,052 properties under contract compared to 4,054 in September 2024. At first glance, stability may seem like good news. However, this flat performance comes against the backdrop of much higher inventory, which means buyers are absorbing a smaller share of available homes. Year-to-date cumulative pending sales total 31,900, a sharp 8.9% decline compared to the same stretch last year and just slightly below the long-term average. The takeaway is that while buyers are still active, the pace of absorption has slowed considerably.
This slowdown shows up clearly in the Activity Index, which measures the ratio of pending to total listings. Today, the Activity Index is 19.3%, down from 21.8% a year ago. This 11.3% year-over-year decline highlights weaker demand intensity across the market. New construction is carrying much of the momentum with an Activity Index of 26.97%, compared to just 16.35% for resales. Builders, with their ability to offer incentives, rate buydowns, and immediate move-in options, are pulling more buyers into their communities. For resale sellers, the competition has become fierce, requiring sharper pricing and flexibility to avoid prolonged market times.
The imbalance between new listings and pending contracts also deserves close attention. Year-to-date, there have been 38,908 new listings compared to 31,900 pending sales, leaving a gap of 7,008 homes. This results in a New Listing to Pending Ratio of 0.70, well below the 25-year average of 0.82. Put differently, for every 10 homes listed this year, only about 7 have gone under contract. Historically, that ratio would have been closer to 8. This gap explains why inventory is stacking up and why buyers are seeing more negotiating power in the current Austin housing market update.
The Months of Inventory metric underscores the same reality. At 5.99 months, Austin now sits firmly in what analysts define as a balanced-to-buyer-leaning market. That’s up 15.7% from 5.18 months in September 2024. Many cities in the metro area are experiencing even sharper increases. For example, Georgetown has climbed to 5.00 months, up from 4.26 last year, while Smithville has jumped from 5.38 months to a striking 14.53 months. Only a handful of areas, such as Wimberley and Elgin, have seen inventory shrink. The broader trend is clear: supply is growing faster than demand, pushing leverage toward buyers.
Sales activity is showing resilience but remains below historic density levels. In September, 2,331 homes closed, bringing the year-to-date total to 22,856. That’s down 4.4% compared to the same period last year, though still 5.4% above the long-term average. When viewed relative to population growth, the numbers reveal the depth of the slowdown. Year-to-date, there have been 894 sales per 100,000 residents, down 6.7% from last year and more than 22% below average. Realtor productivity tells a similar story, with just 1,222 closings per 1,000 agents, nearly 26% below the long-term trend. These ratios show that while closings are happening, they are spread thinner across both population and professional base.
Prices remain well below their 2022 peak but have stabilized in recent months. The average sold price in September was $560,648, about $121,000 or 17.8% below the May 2022 high of $681,939. The median price sits at $417,450, down $133,000 or 24.1% from the May 2022 peak of $550,000. These declines have redefined affordability in Austin housing, making it easier for some buyers to re-enter the market but also leaving many sellers recalibrating expectations. Compared to three years ago, median prices are down 11.18%, confirming that the correction has not only erased the pandemic surge but also pulled values below the prior trendline.
Looking forward, long-term appreciation remains the anchor of the Austin real estate forecast. Over the past 25 years, Austin has delivered a compound annual appreciation rate of 4.666%. Using that rate, a home at today’s median of $417,450 would reach a new peak of about $551,024 by December 2031. That projection assumes steady appreciation and no further shocks to supply or demand. While the path may feel slow, the data suggest Austin remains a market that rewards patient, long-term homeowners and investors.
Not all parts of the market are moving the same way. The bottom quartile of homes is still seeing price pressure, with the lowest 25% of sales down 4.55% year-over-year and price-per-square-foot slipping 3.83%. By contrast, the top quartile is slightly up, with prices rising 3.17% and price-per-square-foot almost flat at -0.51%. This split highlights how demand at higher price points has been more resilient, while entry-level buyers remain more constrained by affordability and financing costs.
Other key market health indicators echo these themes. The absorption rate, which measures how quickly inventory is selling relative to active supply, stands at 17.48%. That’s well below the historical average of 31.82%, signaling a sluggish pace of turnover. The Market Flow Score, another composite index, comes in at 5.48 compared to a historical average of 6.60. Both measures confirm what the raw data already show: Austin’s housing market is slower than normal, with more weight on the supply side than the demand side.
For buyers, the current conditions mean opportunity. More choices, more negotiating power, and the ability to secure homes at prices well below recent peaks create an environment favorable to those ready to act. For sellers, the message is discipline. Price correctly from the start, be open to concessions, and recognize that the first offer may be the best one in a market where buyers are cautious. For investors, the window is nuanced. While cash flow can be harder to achieve at current prices and rents, the long-term forecast for Austin real estate still rests on a foundation of growth, population inflows, and eventual rebalancing of supply and demand.
The Austin real estate market has moved firmly into a stage of correction, but corrections are not collapses. They are resets. As the fall season progresses, watching whether pending sales can gain traction will be critical. If demand holds steady and mortgage rates ease, 2026 could mark the beginning of a new upward cycle. Until then, patience, strategy, and careful analysis are the keys for everyone navigating the Austin housing market.
