Austin Housing Market Hits Inventory Ceiling as Buyer Activity Stalls

The Austin real estate market continues to exhibit characteristics of a structurally weakened and imbalanced environment, where excessive inventory and sluggish buyer activity are causing a prolonged correction across nearly all price segments. The market data as of June 6, 2025, paints a clear picture of a buyer-favorable market, not only in terms of months of inventory but also in terms of pending activity, price drops, and sales velocity.

The headline figure of 17,328 active residential listings is just nine listings short of the record-high 17,337 set on May 26, 2025. This level of inventory is unprecedented for Austin, particularly when placed in historical context. In July 2024, inventory peaked at 15,503, a figure that was already considered elevated. The continued growth of active listings signals a persistent oversupply issue, which in turn exerts downward pressure on pricing and increases the time on market.

Price softness is now widespread and entrenched. Over 53% of active listings across the MLS have recorded price reductions. Some submarkets, like Driftwood and Taylor, show price drops in over 55% of listings, with very little movement upward. Even in more established areas like Austin proper and Cedar Park, more than half of listings have adjusted downward. Price cuts of this magnitude indicate sellers are struggling to find price discovery, and many are still anchored to 2021–2022 expectations, despite market realities.

The Activity Index—a proxy for demand and absorption—currently sits at 21.2%, down from 24.9% at this time in 2024. A healthy, balanced market typically ranges above 35%. This 14.7% year-over-year drop reinforces the narrative that buyer activity is not keeping pace with inventory growth. The only way to absorb the current level of inventory at this rate would be through either a sharp rise in buyer demand, which seems unlikely given macroeconomic constraints, or further downward pressure on prices to reestablish affordability and perceived value.

The Months of Inventory (MOI) metric further confirms this buyer’s market condition. MOI currently sits at 6.15 months, up from 5.12 a year ago—a 20.1% increase. A 6-month MOI has historically been considered the boundary between a balanced and a buyer’s market, and the trend is worsening. Some cities, such as Marble Falls, Dale, and Spicewood, are reporting double-digit months of inventory. These are extreme imbalances between supply and demand that are not sustainable and could result in prolonged listing times, steeper price cuts, and builder incentive escalations.

The relationship between new listings and pending sales continues to deteriorate. The current monthly New Listing to Pending Ratio is just 0.49, meaning for every two new listings that hit the market, only one goes under contract. The year-to-date ratio stands at 0.66—still well below the 25-year average of 0.81. This shortfall in contract activity suggests that new inventory is outpacing absorption to a significant degree. Historically, this level of market inefficiency correlates with either longer-term price correction cycles or structural market shifts such as institutional buy-to-rent acquisitions, which so far have not materialized in meaningful volume for Austin.

From January through June, cumulative new listings reached 25,827—a figure that is 15.3% above the 25-year average. In contrast, cumulative pending listings totaled just 19,560, which is not only 10.1% below average but also represents a significant 19.2% year-over-year decline. This differential of 6,267 units is the highest gap since 2004, when the differential hit 7,383. That year was followed by a multi-year plateau in prices and sluggish recovery. Unless this trend reverses course, Austin could face a similarly drawn-out correction.

In terms of sales activity, 2,511 homes sold in June 2025. Cumulatively, year-to-date sold properties reached 14,539—a figure that is 5.3% above the long-term average but still down 9.0% year-over-year. However, raw volume alone is deceptive without considering population and agent growth. When normalized per 100,000 population, cumulative sales are 22.2% below average, and per 1,000 Realtors, they are 26.2% below average. This drop in sales density underscores the pressure agents face in converting listings into closings in a saturated environment.

Price declines continue to define the current market cycle. The average sold price now stands at $615,200, down from the May 2022 peak of $681,939, representing a 9.79% ($67,000) decline. The median sold price tells a more dramatic story, falling from $550,000 to $455,000—a 17.27% ($95,000) drop. When indexed against the rolling 36-month average, the current median price is down 14.95%, the steepest three-year drawdown on record. These figures represent a sobering departure from the 2020–2021 boom, and signal that much of the froth from that era has now been erased.

A longer-term perspective is also valuable. Based on the 25-year compound annual appreciation rate of 5.027%, it would take 49 months—or until approximately June 2029—for the median price of $455,000 to reach its prior peak of $549,634, assuming no further declines. If further downside occurs or appreciation remains below trend, the recovery could take significantly longer. This timeline provides helpful framing for both buyers and sellers: sellers must manage expectations around price recovery, while buyers may feel justified in expecting better value propositions in the near term.

Examining pricing by segment reveals additional market fragility. From June 2024 to June 2025, homes in the bottom 25th percentile declined by 3.6% in total price and 3.7% in price per square foot. The top 25th percentile also saw a decline—1.7% in total price and 3.2% per square foot. These figures challenge the notion that higher-end homes are more resilient in a downturn. Across the board, price pressures are evident regardless of tier, indicating broad-based affordability challenges rather than price fatigue confined to a specific market segment.

On the topic of affordability, while mortgage rates remain high, they are not solely to blame. The Inventory Stress Index (ISI) is currently at 6.6%, well below the 10% threshold that suggests tight supply. The Market Health Index (MHI), which aggregates absorption, inventory, and pricing momentum, is at 19.7%—a level clearly indicative of a buyer’s market, with values below 30% historically signaling poor market health and a high buyer leverage environment.

In conclusion, the June 6, 2025 data continues to reflect a soft, imbalanced market that is heavily oversupplied and underabsorbed. The sustained drop in pending activity, growing gap between new listings and sales, and broad-based price corrections are not transitory signals—they reflect a structural realignment. While a few isolated markets may still see intermittent demand spikes due to unique employment centers or school districts, the macro trend across the Austin MSA remains one of buyer advantage, longer time on market, and seller concessions. For brokers, the strategic focus must remain on pricing accuracy, buyer education, and clear messaging around market trajectory. The prevailing environment also suggests a need for coaching agents on managing seller expectations, crafting value-based offer strategies, and identifying true motivators within the pool of active buyers. If the trends continue without major policy intervention or a sudden shift in mortgage rates, the remainder of 2025 is likely to see continued correction, modest volume, and a high degree of pricing sensitivity.

Scroll down to view the full Austin Daily Real Estate Briefing PDF for June 06, 2025.​