The Austin housing market is caught between rising supply and sluggish demand, creating one of the most uneven markets the city has seen in years.

Today’s update shows 17,293 active residential listings, just shy of the late-June high of 18,146. This marks a 15.5% increase in available homes compared to August 2024, when inventory sat at 14,976. Importantly, 59.2% of those listings have already experienced at least one price drop, a clear signal that sellers are adjusting expectations in response to slower buyer activity.

From a historical standpoint, Austin’s housing supply remains elevated. New listings year-to-date through August reached 37,212, which is not only up 4.9% from last year but also 23.8% above the long-term average. In other words, the pipeline of new homes continues to build, and it is outpacing demand. Pending sales stand at 4,279 this August compared to 4,090 a year ago, a 4.6% gain, but cumulative pending contracts year-to-date are still down 3.7% from 2024.

This imbalance is reflected in the Activity Index, which measures the pace of transactions relative to supply. The index currently sits at 19.8%, compared to 21.5% last year. That 7.5% decline may not sound dramatic at first, but it represents a meaningful shift when scaled across thousands of properties. A stronger market would typically show activity above 25%, with the current levels pointing toward a supply-heavy environment.

Inventory Pressure and Months of Supply

The months of inventory metric illustrates this imbalance even more clearly. At 6.15 months, Austin now has a 16% increase over last year’s 5.30 months. Historically, six months has been considered the threshold between a seller’s and buyer’s market. Austin crossing into this territory reinforces what many buyers are already sensing: they have leverage.

Regional breakdowns tell the same story. Cities such as Georgetown, Leander, and Liberty Hill have seen inventory nearly double year-over-year, while Austin itself has risen from 4.90 months in August 2024 to 5.37 months today, a 9.7% increase.

What does this mean for sellers? Homes no longer disappear from the market in a matter of days. Instead, properties are lingering, prompting aggressive pricing adjustments. For buyers, this provides room to negotiate concessions, price reductions, and closing credits that were virtually unheard of during the 2020–2022 boom.

Sales Volume and Market Flow

Closed sales are trending softer. Austin recorded 2,759 sold properties this month, bringing the year-to-date total to 20,597. That’s 4.5% fewer than last year, though still 6.4% above long-term averages. Looking at demand relative to population and Realtor count tells a more concerning story: per-capita sales are 21.5% below average, while sales per 1,000 Realtors are 25.3% below average. These numbers confirm what many industry professionals feel — there are too many agents chasing too few transactions.

Absorption rates and Market Flow Scores underscore this cooling. The current absorption rate sits at 12.7%, less than half the historical norm of 31.8%. Similarly, the Market Flow Score is just 3.43, compared to a historical average of 6.59. Both metrics highlight a sluggish environment where listings pile up faster than buyers can absorb them.

Prices and Long-Term Trends

On the pricing side, the story is one of decline from the pandemic highs but stabilization over the past year. The average sold price is $596,353, down 12.6% from the May 2022 peak of $681,939. The median sold price is $450,000, a full $100,000 or 18.2% below the May 2022 peak of $550,000.

For perspective, this reset has erased much of the froth from the COVID-era run-up. Today’s median price is also 9.3% lower than it was three years ago, marking one of the few times in Austin’s modern history when rolling three-year comparisons show declines.

Looking ahead, history suggests that appreciation will return, but it will take time. Austin’s 25-year compound appreciation rate is 4.981% annually. If the current $450,000 median represents the market bottom, it would take roughly 52 months (until late 2029) for prices to recover back to $550,000 under normal growth conditions. That’s a sobering reminder for investors and homeowners alike that markets do not rebound overnight.

Market Segmentation: High-End vs Entry-Level

Interestingly, the market is bifurcated. High-end homes (top 25th percentile) have gained 7.3% year-over-year, while the bottom quartile has declined 1.2%. Entry-level homes are also seeing sharper declines in price per square foot, down more than 3% in the lower quartile, compared to less than 1% among luxury properties.

This divergence reflects affordability constraints. Higher-income buyers remain active, often insulated from rate fluctuations, while first-time buyers struggle with higher mortgage costs. For agents, this means strategies must adjust — luxury listings may still generate competitive interest, while mid-market and starter homes face resistance without significant price cuts.

Buyer, Seller, and Investor Takeaways

For buyers, this is a favorable environment. The combination of high inventory, widespread price drops, and longer market times means negotiation power is firmly in their hands. For those who were sidelined during the frenzy of 2021 and 2022, this is the first real opportunity in years to shop with patience and choice.

For sellers, the message is clear: price competitively from the start. Overpricing and hoping the market will catch up is no longer a winning strategy. With nearly 60% of homes requiring price drops, the data shows that buyers simply won’t engage with unrealistic asking prices.

For investors, the current cycle presents both risk and opportunity. Cash buyers or those with long-term horizons may benefit from acquiring assets while the market is soft. However, investors reliant on financing must carefully weigh rental yields against today’s higher borrowing costs and the potential for values to remain flat for several years.

For agents, the challenge is differentiation. With transaction volume down per capita, success will depend on capturing market share rather than relying on overall market growth. Agents who can guide clients with clear data, set realistic expectations, and highlight opportunities in a shifting environment will stand out.

Conclusion

The Austin housing market is in transition. Supply continues to grow while demand lags, leading to longer times on market, widespread price drops, and softer absorption. Prices remain below their 2022 peaks, and recovery is projected to take several years. Buyers have gained leverage, sellers must reset expectations, and agents must navigate a market where the system rewards preparation and data-driven strategies.

Scroll down to view the full Austin Daily Real Estate Briefing PDF for August 27, 2025.​