The Austin housing market is carrying a heavy supply load into fall, with price drops widespread and buyer activity still lagging behind long-term norms.
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Austin real estate continues to feel the weight of excess inventory this September, as the balance between new listings and pending sales tilts further toward supply. As of September 22, 2025, there are 16,989 active residential listings across the Austin-Area MLS. That’s a 14.2% increase from the same time last year, when inventory sat at 14,875. This year’s peak inventory reached 18,146 in late June, and while levels have eased slightly since then, available supply remains well above last year’s numbers. Notably, 58.4% of all active listings have already recorded at least one price drop, underscoring the pressure on sellers to adjust expectations in the face of slower absorption.
On the demand side, pending listings show continued softness. At 4,069, pendings are down 3.0% compared to the same time in 2024, when they were 4,193. Year-to-date, cumulative pending sales stand at 33,162, which is 5.3% below last year’s pace. While this total is still 2.7% above the long-term average, it reflects the reality that supply growth is outpacing demand growth. The result is an Activity Index of 19.3%, down from 22.0% last year, signaling that a smaller share of active homes is converting into pending contracts. By contrast, the 25-year average for the new listings-to-pending ratio is 0.82; this year’s ratio sits at 0.70, a sign that demand continues to underperform relative to supply.
Months of Inventory (MOI) has risen to 6.02 months, compared to 5.32 months a year ago—a 13.3% increase. Historically, Austin’s balanced market hovers closer to 4–5 months of inventory, so today’s 6+ months place the region firmly in buyer’s market territory. Across the city, conditions vary: Austin proper shows a modest 1.4% year-over-year gain in MOI, while suburbs such as Smithville and Dale have seen MOI double since last fall. This wide gap reinforces how affordability and location influence absorption, with outer markets struggling the most under current conditions.
Sales activity reflects these headwinds. In September, 2,279 properties closed, bringing the year-to-date total to 22,845. That figure is down 4.5% year over year, though still 5.3% above the long-term average. Looking at sales per 100,000 residents, the market is running 6.7% lower than last year and 22.3% below its historical average. This sales density gap highlights how today’s larger pool of available homes is colliding with demand that hasn’t fully rebounded from the post-2022 correction.
Pricing continues to track well below peak levels. The average sold price in September was $559,038, down 18.0% from the May 2022 high of $681,939—a $123,000 drop. The median price paints a similar picture, at $435,000 compared to $550,000 at peak, marking a 20.9% decline. From a long-term perspective, Team Price projects that if today’s $435,000 median represents the market bottom, it would take 63 months—roughly until November 2030—for prices to return to the prior peak, assuming Austin maintains its 25-year compound appreciation rate of 4.838% annually. This recovery timeline underscores that buyers today are purchasing near trough pricing, while sellers must contend with a multi-year road to full value recovery.
The distribution of pricing trends is uneven. Homes in the bottom quartile of the market are still slipping, with prices down 4.3% year-over-year and price per square foot down 2.5%. Meanwhile, the top quartile shows resilience, with prices up 6.0% and $/sqft up 2.2% since last year. This divergence suggests that luxury buyers remain active and insulated, while entry-level and middle-tier segments face the most downward pressure from affordability constraints and higher mortgage costs.
Absorption metrics continue to confirm the slow market. The current absorption rate—measured as sold-to-active ratio—sits at 17.5%. Historically, Austin’s absorption averages closer to 32%, meaning today’s market is operating at nearly half its normal pace. The Market Flow Score, a proprietary indicator scaled from 0 to 10, sits at 5.54 compared to a long-term average of 6.60. This suggests sluggish turnover, heavy supply, and weaker-than-average buyer urgency. For sellers, it signals the need for sharp pricing and patience. For buyers, it signals leverage—more options, more negotiability, and less competitive pressure.
Taken together, today’s data confirms a housing environment where inventory is growing faster than demand, affordability remains strained, and recovery is expected to take years rather than months. For buyers, this market represents opportunity: more choices, less competition, and meaningful room to negotiate. For sellers, the strategy must be realism—meeting the market with competitive pricing, preparing for longer marketing times, and understanding that regaining peak values will be a long-term proposition. For investors, today’s slower pace and lower prices open the door to value acquisitions, though cash flow analysis must account for the elevated supply backdrop. For real estate agents, the emphasis must remain on education—helping clients interpret market data and make informed, long-term decisions.
