The Austin housing market continues to reset as inventory stabilizes, demand softens, and price trends signal an extended correction phase.
Scroll down to view the full Austin Daily Real Estate Briefing PDF for October 17, 2025.
The Austin real estate market closed the week with 16,487 active residential listings — a 13.7% increase compared to this time last year when 14,500 properties were on the market. While inventory remains below the June peak of 18,146, supply continues to outpace demand, placing the region firmly in a softening phase. Nearly 60% of all listings have undergone at least one price drop, underscoring a market still recalibrating after two years of elevated inventory growth and buyer hesitation.
Pending sales are slightly lower, with 3,918 properties under contract — a 4.0% decline from last October. Year-to-date, Austin has recorded 36,104 pending transactions, down 5.9% from last year but still 1.9% above the long-term average. That mixed result shows that while activity is slower than in 2024, it’s not collapsing; buyers are simply more deliberate.
Inventory Expansion and Market Balance
Inventory growth remains the defining theme for Austin housing. Months of Inventory now sits at 5.82, up 12.9% from 5.15 a year ago. This figure signals a balanced-to-buyer-leaning market — one where supply gives buyers leverage to negotiate on price and terms. For comparison, the 25-year average ratio of new listings to pending contracts is 0.82, while 2025’s year-to-date ratio is just 0.71, indicating fewer contracts per listing and a slower market absorption rate.
New listing activity remains strong. From January through October, 43,489 homes were listed — up 1.9% year-over-year and nearly 20% above the historical average. Builders continue to play a dominant role in this trend, with new construction making up 25.76% of current inventory, compared to just 16.6% among resales. That’s a key driver behind the market’s extended inventory growth and ongoing price adjustments.
Activity Index and Market Phases
The Activity Index, a measure of housing demand relative to supply, now stands at 19.2%, down from 22.0% a year ago — a 12.6% decline that places the market in the “contraction zone.” In this range, sales slow noticeably, price reductions become common, and the overall market balance shifts toward buyers.
Across the metro area, conditions vary widely. Some submarkets, such as Kyle, Jarrell, and Cedar Park, remain near equilibrium with Activity Index readings in the mid-20s. Others — including parts of Austin, Liberty Hill, and Lago Vista — have dipped closer to or below 15%, indicating near “freeze” conditions where buyer activity has nearly stalled.
This geographic fragmentation highlights a bifurcated market: new construction-heavy areas are holding stronger absorption rates due to incentives and move-in-ready inventory, while resale-dominated zones are seeing more price fatigue.
Pricing and Long-Term Correction
Prices continue to adjust after peaking in 2022. The median sold price now stands at $450,000, down 18.18% from the May 2022 high of $550,000. The average sold price is $604,398, marking an 11.37% drop from its $681,939 peak. Compared to three years ago, median values are down 4.26%, confirming that Austin’s correction has been both deep and sustained.
From a long-term perspective, Austin’s 25-year compound appreciation rate is 4.981%. Assuming today’s $450,000 median represents the bottom of the cycle, the market would require approximately 53 months — or until February 2030 — to return to its prior peak value near $552,000. That forecast assumes normal appreciation, suggesting a steady but extended path to full recovery rather than a sharp rebound.
Market Efficiency and Absorption
Austin’s Absorption Rate (sold-to-active ratio) sits at 17.53%, significantly below the 31.76% historical average. This gap underscores how much slower inventory is moving — nearly half as efficient as during past balanced periods. Similarly, the Market Flow Score (MFS), which tracks overall turnover velocity, is 5.70, trailing the historical benchmark of 6.59. These metrics collectively describe a market still digesting excess supply, where transaction volume is adequate but far from robust.
Regional and Price-Tier Performance
Not all segments are performing equally. The bottom 25th percentile of home prices fell 4.37% year-over-year, while the top 25th percentile edged up 2.46%. This divergence reinforces a familiar pattern: higher-end homes are holding their value better, often supported by cash buyers and limited competition, while affordable and mid-tier homes face greater pricing pressure from supply-heavy competition.
Geographically, nine cities in the Austin area reported year-over-year median price gains, while 20 posted declines. Areas such as Bastrop, Lockhart, and San Marcos saw double-digit inventory jumps and price softening, while select Austin ZIPs like 78739 and 78749 maintained stronger absorption near 30%.
What It Means for Buyers, Sellers, and Investors
For buyers, today’s environment offers expanded choice, longer negotiation windows, and the opportunity to secure incentives — especially in the new construction sector. However, buyers should approach with a long-term horizon. Given the current appreciation trajectory, short-term gains are unlikely before 2027.
For sellers, pricing discipline is critical. With nearly 60% of listings showing price reductions, success now depends on aligning with the market, not chasing yesterday’s values. Listings priced within 2%–3% of recent comparable sales continue to attract activity, while overpriced homes linger.
Investors face a nuanced market. Cap rates have improved modestly as prices adjusted downward, but elevated financing costs continue to compress returns. Still, the ongoing correction may represent one of the few opportunities this decade to enter Austin’s market before the next upward cycle begins — particularly for long-term holds and build-to-rent strategies.
Broader Outlook
Austin’s housing market is in a mature correction phase — no longer falling sharply but not yet showing signs of recovery. The combination of elevated supply, modest demand, and restrained pricing points toward stability rather than volatility heading into 2026. Seasonal declines in new listings over the next two months will likely bring temporary balance, but lasting recovery will depend on meaningful improvement in affordability and mortgage rate relief.
