Austin Real Estate Market Update – July 07, 2025
Austin Real Estate Market Analysis – July 7, 2025
“Historic Inventory, Softening Prices, and Buyer Leverage Define the Austin Market”
The Austin housing market continues to reflect a deepening correction as updated data for July 7, 2025, underscores persistent oversupply, weak buyer activity, and ongoing downward price pressure. Inventory remains elevated near record levels, buyer engagement is near historic lows, and key pricing indicators point to a market still finding its footing after one of the most significant corrections in decades.
Active residential listings across the Austin-area MLS stand at 17,747, just 329 below the all-time high of 18,076 set on June 27, 2025. This figure is not only significantly higher than the July 2024 peak of 15,503 but also reflective of a sustained trend of rising supply that has defined the market for over a year. Months of Inventory (MOI), a critical indicator of market balance, has climbed to 6.32—up 17.6% from this time last year—bringing the region to the brink of a technical buyer's market, which in Austin is often considered to begin at or above 7 months of inventory.
Seller behavior further confirms market conditions are tilting in favor of buyers. Price reductions are occurring on 56.9% of all active listings across the MLS. In Georgetown, Pflugerville, and Leander, the share of homes with at least one price drop exceeds 61%, highlighting the widespread need for price adjustments to attract buyers. Even in core areas like Austin proper, 57.6% of listings have experienced price reductions.
Buyer activity metrics tell an equally compelling story. The Activity Index, which measures the ratio of pending listings to active listings, currently sits at just 19.5%, down from 23.1% in July 2024. This represents a 15.3% year-over-year decline in buyer engagement, a trend reinforced by the exceptionally low New Listing to Pending Ratio, now at 0.45. Historically, this ratio averages 0.81 in Austin, meaning less than half of new listings are currently converting to pending sales. Year-to-date, the cumulative New Listing to Pending Ratio sits at 0.67, reinforcing the structural imbalance between supply and demand.
Pending sales data confirms the market’s ongoing contraction. July 2025 pending listings total 4,307, down 5.7% from the same time last year. More significantly, cumulative pending sales from January to July total 23,343—a 16.5% year-over-year decline and 8.6% below the long-term historical average. Despite the surge in available inventory, buyer hesitation and affordability constraints continue to dampen contract activity.
Pricing trends have deteriorated in tandem with weakening demand. The average sold price has dropped to $587,432, reflecting a 13.86% decline—or nearly $95,000—from the market peak of $681,939 in May 2022. The median sold price shows an even sharper correction, now at $442,500, a 19.55% decline from the peak of $550,000. These price declines, coupled with inflation adjustments, underscore the severity of the correction, with current median prices sitting 14.08% below where they were three years prior in real-dollar terms.
Market forecasts based on historical appreciation patterns project a long recovery timeline. Assuming Austin real estate resumes its 25-year average annual appreciation rate of 4.91%, it would take approximately 57 months—until March 2030—for median prices to recover to their previous peak of $548,852. This extended recovery timeline highlights how significant this market reset has been.
Segmented price data further reveals that affordability challenges are disproportionately impacting entry-level and mid-market homes. Properties in the bottom 25th percentile have seen year-over-year price declines of 5.52%, with price per square foot falling by 4.62%. In contrast, homes in the top 25th percentile have experienced minimal price declines of just 0.16%, with price per square foot down only 0.41%, suggesting higher-end market segments have been more resilient.
Geographically, nearly every submarket in the Austin area is showing signs of stress. The Market Health Index (MHI) is down to 17.8%, far below the 30% threshold that typically delineates a buyer's market. The Inventory Stress Index (ISI) sits at 5.21%, further reinforcing that an abundance of supply is overwhelming current demand.
Sales Density metrics, which track the number of homes sold relative to both population and Realtor counts, confirm that transactional activity is struggling to keep pace with available inventory. Year-to-date, there have been 17,394 closed sales, down 7.4% from last year. While this is still 4.8% above the long-term average, normalizing for population shows a more concerning trend. Sales per 100,000 population are down 9.6% year-over-year and 22.6% below historical norms. Sales per 1,000 Realtors are down 3.3% year-over-year and 26.4% below average, reflecting declining opportunities for agents and shrinking transaction volume relative to industry size.
In short, the July 2025 Austin real estate market remains mired in a correction cycle defined by excess inventory, weak buyer activity, declining prices, and prolonged absorption timelines. Until these conditions change, buyers retain significant negotiating leverage, and sellers will continue to face pricing and marketing challenges.
Scroll down to view the full Austin Daily Real Estate Briefing PDF for July 7, 2025.
Top 5 Questions and Detailed Answers for the Austin Market
What factors are contributing to record-high housing inventory in Austin?
The Austin housing market is experiencing historically high inventory levels driven by several interrelated factors. Many sellers, particularly those who purchased before or during the pandemic boom, are listing properties in an attempt to capture equity before further price declines occur. At the same time, new construction completions have added significant supply, particularly in suburban areas. This influx of listings comes at a time when buyer demand has softened substantially due to higher mortgage rates, affordability challenges, and economic uncertainty. The result is an accumulation of unsold properties, pushing active residential listings to 17,747—just shy of the all-time high set in late June 2025.
Why is the New Listing to Pending Ratio so low, and what does this mean for sellers?
The New Listing to Pending Ratio, currently at 0.45, means that for every 100 new listings entering the market, only 45 are going under contract. Historically, a balanced Austin market averages a ratio of 0.81. This extremely low figure indicates significant buyer hesitation, affordability limitations, and competition among sellers. For sellers, this means pricing aggressively, staging effectively, and being prepared for longer days on market are essential. Failure to adjust to these market realities increases the likelihood of price reductions, which are already occurring on nearly 57% of active listings.
How long is it expected to take for home prices to recover to peak levels?
Assuming the Austin market returns to its historical 25-year average annual appreciation rate of 4.91%, it would take approximately 57 months—or until March 2030—for median home prices to recover to the May 2022 peak of $548,852. This timeline reflects both the severity of the correction and the realistic pace of price growth given current market headwinds. While faster recovery is possible if buyer demand rebounds significantly, the current inventory overhang and affordability challenges make a rapid return to peak pricing unlikely.
Which price segments are seeing the greatest declines, and why?
The lower end of the Austin market is experiencing the most pronounced price declines, largely due to affordability challenges. Homes in the bottom 25th percentile have seen prices fall 5.52% year-over-year, with price per square foot down 4.62%. Entry-level and mid-priced buyers have been disproportionately impacted by rising interest rates, reducing purchasing power and limiting demand in these segments. Conversely, the top 25th percentile of the market has proven more resilient, with minimal price declines of 0.16%, as higher-income buyers tend to be less rate-sensitive and often have more purchasing flexibility.
Is Austin officially in a buyer's market, and how can buyers take advantage?
While the Austin market has not yet crossed the technical threshold for a full buyer's market—commonly defined by Months of Inventory exceeding 7 months—it is rapidly approaching that level. MOI now stands at 6.32, and other key indicators such as the Activity Index (19.5%), Market Health Index (17.8%), and widespread price reductions signal significant buyer leverage. Buyers can capitalize on this environment through strategic negotiations, inspection contingencies, and securing price concessions. With nearly 57% of listings experiencing price drops and ample inventory to choose from, buyers who are prepared and patient are well-positioned to secure favorable terms.
Have a Question or Want to Dive Deeper?
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