This week’s Monday Touch Point underscored how temporary January distortions are still clouding short-term readings of the Austin housing market, even as underlying trends are becoming easier to identify. Weather-related delays pushed listings and pendings into February, but beneath that noise, new listings are now matching last year while pending activity is lagging, allowing inventory to begin rebuilding. Sold data remains soft due to late-2025 contract slowdowns, while leading indicators such as the new-listing-to-pending ratio, months of inventory, and the activity index point to a market that is stabilizing but not yet recovering. Elevated price reductions, rising back-on-market counts, and growing submarket divergence reinforce a core reality: buyer behavior is being driven by value alignment, affordability, and micro-location—not optimism or rate headlines—and success in this market depends on disciplined pricing and hyper-local execution.

Austin Market Activity Is Shifting Early in February

The Austin real estate market is entering February with a noticeable change in momentum. New listings are beginning to outpace absorption, and while demand has not disappeared, it is clearly more selective. Early-month data shows the market transitioning away from January’s storm-distorted numbers and back toward a more normalized pattern that agents need to recognize quickly.

So far this week, new listings have already exceeded last week’s total, while pending activity continues to lag year over year. That imbalance is pulling the new-listing-to-pending ratio down into the low 0.5 range, a level that historically signals inventory expansion rather than contraction. While this number is still heavily influenced by delayed January data, it is an early warning sign that inventory pressure is returning.

Inventory Growth Is Back in Play

Active listings across the Austin-area MLS are now over 13,000, with nearly half of all listings having experienced at least one price reduction. That alone tells us that sellers are having to adjust expectations to meet current buyer behavior. When listings rise faster than pendings, months of inventory increases, and that is exactly what is happening.

Months of inventory now sit around 4.7 months and are climbing. While the City of Austin remains tighter than many surrounding cities, year-over-year inventory declines within the city are shrinking. Many suburban and outlying markets are already seeing substantial inventory growth, creating a clear divergence between micro-markets.

This is not a market moving in one direction. Some zip codes are still highly competitive, while others are experiencing meaningful slowdown. Agents must be hyper-local and data-specific when advising clients.

Activity Index Remains Stable, but Risk Is Building

The overall Activity Index is holding just above 20 percent, which keeps the market out of contraction territory for now. However, resale activity has already dipped below that threshold in several areas. When the Activity Index falls below 20 percent, inventory typically accelerates quickly.

The current data suggests the market is balanced on a line. If pending activity does not recover meaningfully over the next few weeks, inventory growth will continue to apply downward pressure on pricing across more segments of the market.

Pricing Signals Are Becoming More Telling

January closed with a median sold price near $400,000, the lowest January reading in many years. February pricing has rebounded slightly, which is normal seasonally, but the broader trend remains concerning. Austin has now experienced four consecutive years of negative median price movement, something that has not occurred since the late 1980s.

One of the most important developments right now is that the top 25 percent of the market is no longer outperforming the bottom 25 percent in many cities. Historically, higher-priced homes have been propping up average prices. That support is weakening. When upper-tier homes slow, average prices fall faster, and market psychology shifts quickly.

February Outlook and Inventory Forecast

New listings are tracking roughly even with last year, but pending activity is down close to 10 percent. If that pattern persists, inventory will continue to rise through the spring. Based on current trends, active listings are projected to approach 20,000 by mid-June, with June 14 flagged as a likely inflection point.

This does not signal a collapse. It signals a market that is still working through its correction and searching for a durable bottom. The data indicates we are likely 85 to 90 percent through the correction, but the final phase has not yet completed.

Rates, Inflation, and the Week Ahead

Mortgage rates have improved modestly, with conventional 30-year rates hovering in the low sixes and FHA rates dipping below six percent. Refinance activity is increasing sharply, particularly for buyers who locked in higher rates last year.

This week’s economic calendar is critical. Inflation data, bond auctions, payroll numbers, and consumer sentiment will all feed directly into rate volatility. Friday’s CPI release will be especially important, as inflation expectations remain elevated. Agents should be prepared for rapid shifts in buyer sentiment tied to rate movement.

Auctions Are Becoming More Common — and Riskier

Auction properties are appearing more frequently across multiple platforms. These transactions carry elevated risk, including unclear title, potential liens, limited inspection access, and non-standard bidding rules. Agents must clearly communicate these risks and ensure clients understand them before bidding.

The role of the agent in auction transactions is not to sell the deal, but to surface the risk and let the client decide with full transparency.