Active residential listings currently sit at 13,371. While that is well below the recent high of 18,146 reached in late June, it is still 15.9 percent higher than the same time last year. This tells us that the market has relieved some of the excess supply that built up mid year, but it has not returned to the tighter conditions many sellers remember from prior cycles. More than half of all active listings, 56.2 percent, have had at least one price drop. That is a clear sign that sellers are still adjusting to where buyers are willing and able to transact. Price reductions at this scale are not typical in a strong seller driven environment and instead point to a market where supply remains ahead of demand.
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Breaking inventory down further helps explain what is happening. Of the 13,371 active listings, 4,001 are new construction and 9,370 are resale homes. Builders continue to represent a meaningful share of supply, and new construction is generally moving faster than resale. That difference shows up later in the Activity Index and Months of Inventory numbers, where resale homes are experiencing more friction. For resale sellers, competition is not just coming from other homeowners but also from builders who often have stronger incentives and more flexibility.
Looking at supply flow over the full year adds more context. Cumulative new listings from January through December total 49,801, which is up 4.7 percent year over year and a striking 22.2 percent above the long term average. In simple terms, more homeowners chose to list in 2025 than in a typical year. That continued listing pressure has made it difficult for the market to meaningfully tighten, even as some buyers have stepped back.
Pending listings tell the other half of the story. Current pending listings are at 3,255, down 4.5 percent from last year. New construction accounts for 1,400 of those pendings, while resale properties make up 1,855. When buyers pull back slightly while sellers remain active, the imbalance shows up quickly in the data. Over the full year, cumulative pending listings reached 43,473, down 1.6 percent year over year but still 7.1 percent above the historical average. That combination tells us demand has not collapsed, but it has not kept pace with supply.
The Activity Index captures this imbalance clearly. The overall Activity Index for 2025 is 19.6 percent, down from 22.8 percent in 2024, a decline of 14.2 percent year over year. New construction is holding up better with an Activity Index of 25.92 percent, while resale activity sits much lower at 16.53 percent. This gap matters. Builders are closer to balanced conditions, while resale homes are firmly in a slower phase.
When we break the resale Activity Index into market phases, the picture becomes even clearer. Half of resale markets fall into the contraction or danger zone, defined by Activity Index readings between 15 and 20 percent. Another 40 percent are already in the crisis or freeze category, with Activity Index readings below 15 percent. These are environments where buyer hesitation is common, homes take longer to sell, and price corrections tend to accelerate. Very few areas are operating in expansion or equilibrium conditions.
Another important leading indicator is the new listing to pending ratio. On a monthly basis, the ratio currently stands at 0.87. For the full year, the ratio is 0.74, well below the 25 year average of 0.82. This means that for every new listing coming to market in 2025, fewer homes are going under contract than what we would normally expect in a balanced market. Over the course of the year, the cumulative difference between new listings and pending listings totaled 6,328 homes. That excess supply has to go somewhere, and in most cases, it translates into longer market times, more concessions, and continued price pressure.
Months of Inventory reinforces this trend. The Austin market closed 2025 at 4.76 months of inventory, up from 4.08 months in 2024, an increase of 16.7 percent year over year. While this is not an extreme oversupply, it firmly places the market in a buyer advantage to neutral range depending on location and price point. For resale homes specifically, many areas now sit in buyer advantage or buyer control territory, where inventory exceeds 210 days of supply. These conditions favor buyers who are patient and well informed.
Sales activity itself remains subdued. December recorded 2,134 sold properties. For the full year, cumulative sales reached 29,945, down 4.6 percent year over year but still 6.6 percent above the long term average. This might sound contradictory, but population growth and agent count matter. When sales are normalized per 100,000 people, Austin recorded 1,168 sales, down 6.9 percent year over year and 21.4 percent below average. Sales per 1,000 Realtors were 1,622, essentially flat year over year but nearly 24 percent below average. In short, transactions are happening, but they are spread across more people and more agents, making the market feel slower on the ground.
Pricing trends continue to reflect the longer correction. The average sold price in December was $582,394, down from the May 2022 peak of $681,939. That represents a 14.6 percent decline, or roughly $100,000. The median sold price tells an even clearer story. At $434,975, the median is down 20.91 percent from the May 2022 peak of $550,000, a decline of about $115,000. Median prices are especially important because they better reflect typical buyer experiences.
When we compare today’s median price to where the market was 36 months ago, prices are down 3.34 percent. This reinforces the idea that much of the excess appreciation from the pandemic era has been unwound. Long term fundamentals matter here. Austin’s 25 year compound annual appreciation rate is 4.838 percent. If we assume the market is near the bottom of this correction, it would take roughly 63 months, or until February 2031, for median prices to return to the prior peak using that historical growth rate. That is not a forecast of guaranteed outcomes, but it provides a realistic framework for expectations.
Price behavior also varies by segment. Over the past year, the bottom 25th percentile of home prices declined by 5.11 percent, while the top 25th percentile actually saw a modest increase of 0.79 percent. This split highlights a market where affordability constraints are pressuring entry level and mid tier buyers more than high end buyers. It also explains why some sellers still feel stable while others face repeated price reductions.
Demand relative to supply remains weak. The absorption rate, measured as sold listings divided by active listings, is currently 18.36 percent. The historical average is 31.59 percent. This gap shows how much slower inventory is moving compared to normal conditions. A lower absorption rate generally means buyers have more leverage, and sellers must compete harder on price, condition, and terms.
Interestingly, the Market Flow Score sits at 7.81, above its historical average of 6.59. This indicates that while the market is slower overall, the transactions that do happen are still moving through the system with reasonable efficiency. In practical terms, well priced homes that align with buyer expectations are still selling. The challenge is that fewer homes meet that standard.
For buyers, this Austin housing forecast continues to favor patience and discipline. Inventory is elevated, price reductions are common, and negotiation leverage remains strong. Buyers who focus on value, not headlines, can find opportunities, especially in resale segments where sellers are motivated.
For sellers, the data calls for realism. Pricing to yesterday’s market is no longer viable. Homes that are positioned correctly from day one have the best chance of selling without multiple price drops. Understanding local activity levels and competing inventory is critical.
For investors, the Austin real estate forecast remains cautious. Cash flow remains tight in many areas, and appreciation driven strategies should be viewed through a long term lens rather than short term rebounds. The numbers suggest stabilization, not rapid upside.
For real estate agents, this market rewards professionalism and data driven guidance. Consumers need clarity, not optimism disconnected from reality. Those who explain the numbers clearly and set proper expectations will build trust and long term relationships.
Austin housing continues to adjust, and today’s Austin market update reinforces that the correction is a process, not an event. The market is healthier than it was at peak imbalance, but it has not yet returned to historical norms. Understanding that middle ground is essential for navigating 2026 successfully.
