The Austin housing market continues to balance on the edge of softening and contraction as inventory climbs and buyer activity slows heading into late October.
Scroll down to view the full Austin Daily Real Estate Briefing PDF for October 16, 2025.
The Austin-area real estate market is showing clear signs of a fall slowdown, marked by higher active inventory, more price reductions, and reduced absorption compared to last year. As of October 16, 2025, the Austin-Area MLS has 16,425 active residential listings, representing a 13.8% increase year-over-year. Nearly six out of ten homes (59.3%) have experienced at least one price drop, underscoring a market where sellers are competing for limited buyer attention. Meanwhile, the Activity Index—a measure of buyer engagement relative to available inventory—has dipped to 19.3%, down from 22.0% a year ago.
In plain terms, Austin housing has officially entered the “contraction” phase. Buyer activity is not keeping pace with new listings, creating a buildup of inventory that will likely carry into early 2026.
Active Listings and Inventory Pressure
Active inventory has risen significantly compared to 2024, though it’s still below this summer’s June high of 18,146. The current 16,425 listings reflect steady supply pressure that’s being met with fewer pending contracts. In fact, pending listings are down 3.7% year-over-year, with just 3,932 homes under contract, signaling that buyers are becoming more selective and cautious amid higher mortgage rates and economic uncertainty.
The composition of the active market reveals a key divide: new construction properties now make up 25.98% of all pending activity, while resale homes sit at a lower 16.66%. Builders, who can adjust pricing and offer incentives, are capturing the attention of buyers, while traditional resale sellers are being forced to chase the market down with price reductions.
Across Central Texas, this growing supply imbalance is reflected in months of inventory, now sitting at 5.80 months, up from 5.12 last year—a 13.4% increase year-over-year. While Austin proper has held relatively steady at 5.3 months, many suburban and exurban areas are seeing double-digit months of supply, a clear indicator of overhang.
Market Activity and Buyer Engagement
The Activity Index, which measures active-to-pending ratios across the MLS, provides one of the clearest reads on demand. Austin’s current reading of 19.3% puts it firmly in the “Contraction / Danger Zone” phase, where buyer demand is too weak to absorb new listings efficiently. Out of 30 cities in the Central Texas region, 8 cities and 21 ZIP codes fall in this zone, while another 7 cities and 21 ZIPs are in the “Crisis / Freeze” category—where buyer paralysis is the dominant condition.
Markets such as Georgetown, Liberty Hill, and Leander—once some of the region’s most active corridors—are now posting activity levels between 15% and 19%. In contrast, pockets like 78739, 78727, and 78728 in Austin remain above 30%, reflecting local resilience in well-established neighborhoods with limited resale supply.
This bifurcation of market performance highlights how localized demand has become. While established urban and near-suburban ZIP codes hold steady, the outer periphery is softening under the weight of new supply.
New Listing to Pending Ratio and Historical Context
A critical measure of market health—the New Listing to Pending Ratio—currently stands at 0.60 for the month and 0.71 year-to-date, compared to the 25-year historical average of 0.82. This means that for every 100 new listings entering the market, only about 71 are going under contract. The remainder accumulates into inventory, pushing months of supply higher and prompting the elevated rate of price reductions now seen across the MLS.
Cumulatively, 43,310 new listings have been added so far this year—1.4% higher year-over-year and 19.3% above the long-term average. However, pending contracts total only 35,981, down 6.3% year-over-year, emphasizing that supply growth is outpacing demand by a wide margin. The net difference of 7,329 more listings than pendings confirms the market’s imbalance and explains why nearly 60% of sellers have reduced prices.
Sales Volume and Market Efficiency
Sales volume continues to hover below last year’s levels. Year-to-date, 25,734 homes have sold, down 2.9% year-over-year, but still 7.7% above the long-term average, meaning overall demand remains present—but constrained by affordability. When normalized by population, the market shows 1,006 sales per 100,000 residents, a 5.2% decline year-over-year, and 20.6% below the long-term average, revealing how growth in housing supply has outpaced growth in buyers.
The Absorption Rate—the percentage of active listings selling within a given period—is at 17.53%, far below the historical average of 31.76%. This low absorption rate means properties are sitting longer, and sellers must compete aggressively on pricing and concessions.
Adding another dimension, the Market Flow Score (MFS)—a composite index combining supply, demand, and turnover metrics—currently sits at 5.68, compared to a historical average of 6.59. In essence, the market’s “engine” is running at roughly 86% of its normal efficiency.
Home Prices and Long-Term Trajectory
The median sold price in October is $450,000, which represents an 18.18% decline from the May 2022 market peak of $550,000. The average sold price stands at $613,191, down 10.08% from the same 2022 peak. This price compression, while substantial, has been relatively stable since early summer, suggesting that the market may have already reached its price floor.
Historically, Austin’s real estate market has appreciated at a 25-year compound rate of 4.981% annually. Assuming the current median of $450,000 marks the bottom of this correction, it would take approximately 53 months—or until February 2030—to regain the 2022 peak value of $552,105 at that rate of appreciation.
At the price tier level, performance varies. The bottom 25th percentile of the market has seen a 3.96% drop in price and a 5.41% decline in price per square foot, while the top 25th percentile remains up 3.31% in price, though slightly down in $/SqFt (-0.96%). This reinforces that the market’s weakness is concentrated in entry-level and investor inventory, not the upper segments.
City-Level and Regional Trends
Out of 30 tracked cities in the Austin metropolitan area, nine cities are up year-over-year in median price, while twenty have declined. Areas like Kyle, Pflugerville, and Buda are posting moderate annual appreciation or stability, while Dripping Springs, Lago Vista, and Wimberley show notable year-over-year price declines tied to elevated supply levels.
The months-of-inventory table highlights how extreme the divergence has become. Some markets—like Burnet, Smithville, and Spicewood—are sitting above 11 months of supply, while others such as Manchaca have dropped to just 2.05 months, signaling renewed demand in small, well-located pockets.
This unevenness demonstrates how the Austin housing forecast for late 2025 depends heavily on location, price point, and product type.
Outlook for Buyers, Sellers, and Investors
For buyers, this market offers more leverage and more options than at any point since before the pandemic. Longer days on market and the prevalence of price reductions create opportunities to negotiate repairs, credits, or rate buy-downs. However, buyers should still be selective, as some submarkets remain competitive—particularly for move-in-ready homes under $500,000 in central ZIPs.
For sellers, strategy and pricing precision are everything. Homes priced correctly out of the gate and marketed aggressively still move, but aspirational pricing is punished quickly. With inventory levels elevated, buyers have become data-driven, and emotion-driven overpaying has virtually disappeared from the market.
For investors, conditions favor selective acquisitions. Yields have improved modestly as prices have adjusted downward, but rising property taxes and higher financing costs mean return models must be conservative. The long-term outlook remains strong due to Austin’s steady 4.9% historical appreciation rate and regional population growth, but near-term volatility should be expected.
Conclusion
The Austin real estate market in October 2025 is stable but sluggish—defined by excess inventory, slower absorption, and declining median prices. The data points toward a continued correction phase that may persist into early 2026 unless demand meaningfully rebounds. For now, the market remains one where informed buyers and disciplined sellers can still meet—but only if both are realistic.
