Austin’s housing market is showing clear signs of fatigue as buyer activity slows, inventory builds, and prices drift further from their peak.
Scroll down to view the full Austin Daily Real Estate Briefing PDF for October 20, 2025.
The Austin real estate market continues its slow correction this October, reflecting the combined weight of higher inventory, fewer pending contracts, and a gradual cooling in buyer urgency. Active listings now total 16,527, marking a 14.1% increase from the same time last year. While that may sound modest, it represents a 2,000-home rise from fall 2024 and underscores how far supply has grown since the pandemic frenzy. Nearly six in ten listings (59.1%) have seen at least one price drop—an unmistakable signal that sellers are adjusting expectations as the market rebalances.
The broader austin housing forecast points to continued softening. The Activity Index, which measures the ratio of pending listings to total market size, sits at 19.3%, down from 22.2% one year ago—a 13.2% decline. This puts Austin solidly in the “contraction zone,” where supply outweighs demand and prices tend to erode. For resale homes, the picture is even sharper: just 16.45%, indicating that buyers remain highly selective. In contrast, new construction holds a stronger 25.75% Activity Index, showing that builders, with incentives and rate buydowns, are still capturing buyer attention.
The Supply Side: Inventory and Listings
Austin’s months of inventory has risen to 5.83, compared to 5.16 a year earlier—a 13% increase. Within the City of Austin, inventory climbed just 1.6% year-over-year but has jumped 22.7% year-to-date. While these figures may not seem alarming in isolation, they represent a dramatic reversal from the ultra-tight 1.0 to 1.5 months of inventory seen in 2021. The balance has clearly shifted toward buyers, with more choices and longer marketing times.
Cumulative new listings have reached 43,767 year-to-date, a 2.5% annual increase and 20.5% above the long-term average. That surge in supply has not been matched by demand. Cumulative pending listings are down 5.4% year-over-year, totaling 36,306, which still sits slightly above average but reflects a slower absorption rate. The gap between new and pending listings—over 7,400 homes—keeps pressure on sellers to adjust pricing.
The monthly new-listing-to-pending ratio stands at 0.60, well below the 25-year average of 0.82. Historically, this ratio hovers near 1.0 during balanced conditions, meaning every new listing finds a buyer within the same month. At 0.60, today’s ratio indicates that for every 10 new homes listed, only six go under contract. This imbalance is widening the path toward longer days on market and more aggressive price adjustments.
Buyer Demand and Market Flow
The Austin housing market’s overall Market Flow Score (MFS) is now 5.68, compared to its historical average of 6.59. The MFS blends several turnover metrics—including absorption rates and velocity of sales—to gauge how efficiently the market converts inventory into closings. A lower score suggests sluggish movement and a heavier reliance on price cuts to stimulate activity. Meanwhile, the absorption rate (sold-to-active ratio) has dropped to 17.52%, barely half of its long-term norm of 31.76%, showing that sales volume remains well below what would be considered a stable marketplace.
For context, the Austin market’s bottom 25th percentile homes—typically entry-level price points—saw prices decline 2.65% year-over-year, with price per square foot down 5.15%. Conversely, the top 25th percentile (higher-end homes) managed a 5.74% price gain, but those properties are increasingly relying on significant buyer incentives or rate buydowns to close deals. The market is effectively bifurcating: luxury demand remains selective but stable, while the mid-range and entry-level segments continue to soften.
Pricing and Market Corrections
The median sold price in October is $450,000, a striking $100,000 below the May 2022 peak of $550,000—a decline of 18.18%. The average sold price, now at $603,670, is down 11.48% from that same peak. These declines are consistent with a cyclical correction following an overheated market, but the persistence of high inventory suggests further sideways movement before meaningful appreciation resumes.
From a long-term perspective, the 25-year compound appreciation rate for Austin housing remains 4.981% annually. If today’s median of $450,000 represents the trough, Austin would need 53 months (until early 2030) to reach its previous peak value of roughly $552,000 again—assuming a stable 4.98% appreciation trajectory. In other words, this recovery is likely to be gradual, not a quick rebound.
Regional Variation and Market Phases
Across the Austin metro, only 9 cities recorded year-over-year median price gains, while 20 cities declined. The market phase distribution tells the deeper story. No major ZIP code currently qualifies as being in Expansion (>30% Activity Index). Only a handful remain in Equilibrium (25–30%). The majority—17 ZIP codes—sit in the Softening phase (20–25%), and 25 ZIPs are in Contraction (15–20%). Another 27 ZIP codes are effectively in Crisis/Freeze, with Activity Index levels under 15%, reflecting near-paralysis among buyers.
This dispersion shows that the correction is broad-based rather than localized. Areas such as Bastrop, Liberty Hill, and San Marcos are under visible pressure, with price drops exceeding regional averages and months of inventory pushing toward 7 or more. Even within Austin proper, ZIP codes like 78741, 78744, and 78753 are posting Activity Index readings below 15%, signaling heavy resistance at current list prices.
Implications for Buyers, Sellers, and Agents
For buyers, this market offers leverage not seen in years. Elevated inventory means more negotiation power, seller-paid concessions, and longer due diligence windows. Yet, mortgage rates remain a limiting factor, keeping affordability stretched even as nominal prices fall.
For sellers, strategy is everything. Pricing must align with current market velocity, not yesterday’s comparables. The high percentage of listings with price reductions (nearly 60%) highlights the danger of chasing the market down. Sellers who price aggressively from day one are the ones still finding success.
For real estate agents, these conditions underscore the importance of deep data literacy and honest client communication. The Austin real estate forecast isn’t about panic—it’s about realism. Understanding absorption ratios, months of inventory, and the Activity Index equips professionals to guide clients confidently through a slower, more analytical market.
Looking Forward
October 2025 represents a market that is stable in structure but subdued in pace. Demand remains present, but cautious. Inventory continues to rebuild, but without the panic or distress seen in past downturns. While Austin’s growth fundamentals—population, job creation, and migration—remain strong, the data indicates a protracted normalization phase. Recovery will depend on either stronger employment-driven demand or meaningful improvement in affordability through interest rate relief.
Until then, the market remains in soft contraction, where patience, data-driven pricing, and precise representation matter more than ever.
