Austin’s Fall Market: Stable, Slower, and Full of Silver Linings

It’s hard to beat Austin in October. Crips mornings, warm days, and world-class entertainment at every turn. What better reason to take a non-staged, casual stroll across Congress Ave ;) From a real estate perspective, it’s also a good time to take stock of the market and see what to expect as we close out the year.

Prices have been flat, but recent data warrant monitoring

I always like to start these market updates with an overview of price. You can slice and dice interest rates and inventory all you like, but it’s price that shines atop the lighthouse. You can see on Figure 1. below that the median home price across the Austin MSA (Metropolitan Statistical Area consisting of Bastrop, Caldwell, Hays, Travis, and Williamson counties) is right around $415,000, almost exactly where it started the year.

Figure 1. Median Sales Price (Austin MSA: 2018-2025)

It’s not just this year in which price has been sticky – if you zoom out and look at the past 3 years, the trough-to-peak delta — the difference between the market’s low and high points — has remained remarkably tight. Since late 2022, that range has stayed within roughly $50,000. That may not sound exciting, but it’s actually an impressive display of stability given how much inventory has come online and how much pressure interest rates have put on affordability.

That being said, it’s hard to ignore last month’s sharp downswing. You can see from previous years that it’s inline with the post-summer slow down that we see seasonally, but it’s a bit more pronounced than years past. We’ll see how the rest of the quarter shakes out.

Redfin’s recent report on buyer demand may be telling.

According to Redfin, Austin Is America’s Strongest Buyer’s Market, With Over Twice as Many Home Sellers as Buyers. I’m a little dubious of the “propriety date” they are basing this off, especially given some of the other strong metrics discussed further down in this post, but the overarching sentiment is certainly correct. Ask any listing agent across the city and they’ll tell you that it’s tough sledding out there right now to get people through the door. There are a couple of reasons why things are tilting so far in favor of buyers.

On the supply side of the equation, it’s pretty simple: we’ve got more inventory now than we’ve had in decades. You can see on Figure 2. below that we’re at about 5.5 months of housing supply. I would argue, however, that after 3 consecutive months of decreases, we’ve clearly passed our peak. That doesn’t negate the fact that with so many options, buyers have little urgency. But it does quell fears of an unhealthy glut of inventory.

Figure 2. Months of Inventory (Austin MSA: 2018-2025)

On the demand side of the equation it’s a little bit more complicated.

One reason for the lack of demand in the sales market is the substantial drop in rental prices. Over the past few years, a ton of rental inventory has come online, particularly downtown, and that has had a ripple effect to many surrounding parts of the city. In many neighborhoods, monthly rent payments are far lower than what it would cost to own the same property.

For example, a home priced around $500,000 at today’s mortgage rates and a typical 5% down payment translates to a monthly payment of roughly $4,000, once principal, interest, taxes, and insurance are included. The same home can often be rented for around $2,500 per month. That gap has pushed many potential buyers into the rental market — not because they don’t want to buy, but because it simply doesn’t pencil out right now.

Interest rates hit 2.5 year-low but many buyers remain indifferent

Another reason for the dearth of demand is the interest rates. The truth of the matter is that we were spoiled. Gulping down sugary rates in the 2s and 3s makes it hard to go back to the savory reality of the 6s and 7s. This remains true despite the fact that as of yesterday, we essentially hit a 2.5 year-low on the 30-year fixed-rate average, closing at 6.13%.

Figure 3. Average 30-Year Mortgage Rates (February 15, 2023 – October 29, 2025)

Not everybody is rate-sensitive. The “5 Ds of real estate” – divorce, diamonds, diapers, downsizing, and death – sometimes make buying and selling a necessity. And for less educated first-time homebuyers (not you, of course – you’re reading this!), they may not understand the implications of higher rates and may jump into the market regardless. But for others that have the luxury of being more discerning when it comes to rates, trepidation remains. It’s always important to keep in mind, however, that once interest rates make a sharp dip, demand will increase and prices will follow soon after.

What this means for buyers

For buyers, opportunities are better than they’ve been in years. Prices are softer, sellers are contributing to closing costs, and the market’s slower pace means that homes in desirable neighborhoods — the ones that felt unattainable just a couple years ago — are finally within reach.

If you’re looking in a location where there are new construction homes for sale, these are amongst the best deals out there right now. Builders have big pockets and are able to adapt to market trends more quickly than, say, a homeowner who is listing a home already at their bottom line. Builders are offering incentives to cover closing costs as well as aggressive mortgage rate buydown.

What this means for sellers

Competition is real. With inventory high, buyers are choosy. Homes that miss the mark on price or presentation stand out for the wrong reasons and accumulate days on market. Putting your best foot forward is more important now than ever. Paint and make ready on the interior. Pressure washing and landscaping at the exterior are the bare minimum.

Now is not the time to use your spouse’s niece who just got her license as your listing agent. Use a realtor that will go above and beyond on listing your home: interior design consult, creme de la creme of photography and videography, 3D tours, email campaign, Zillow Showcase, open houses, paid social media ads, 3-phased marketing,etc. Hmm if only you knew someone. Anyways, long gone are the days of slapping anything on the MLS with cell phone photos and expecting it to sell.

Knowing your “hyper-local market” is super important. Metro-wide stability can hide local variation. Some neighborhoods are softening while others are still competitive. Getting granular matters.

Real estate is not monolithic

Each person and family have their own unique circumstances and goals. Maybe your neighbor has the luxury of renting out their home for a year before selling, whereas your situation mandates that you list now. Maybe your debt-to-income ratio is tight and a builder rate buydown is what’s going to get your payments in the desired range.

Wherever you’re at, I’m here to meet you! You can reach me on my cell phone at (512) 808-8161 or you can book a consultation here.

Onward,

Sam

Steady as She Goes