Buyers Regain Leverage as Inventory Expands and Market Activity Cools
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Across the Austin housing market, inventory continues to expand while buyer activity remains muted, solidifying a market that now heavily favors buyers. As of October 23, 2025, there are 16,348 active residential listings across the Austin-Area MLS—up 14.8% year over year—with nearly 60% of all listings having experienced at least one price drop. The Activity Index, which tracks market engagement between buyers and sellers, has fallen to 19.4%, well below the balanced threshold of 25%–30%. These combined trends mark a decisive phase of market contraction, where supply growth outpaces demand and pricing pressure increases across most cities and zip codes.
Market Overview
Austin’s housing market remains firmly in a buyer-driven phase. Active listings have climbed steadily since early spring, peaking near 18,000 in late June before settling slightly lower this month. Even with the modest seasonal pullback, the current inventory count of 16,348 remains substantially above 2024 levels and 21% higher than long-term averages. Rising inventory levels signal more competition among sellers, especially in suburban markets like Leander, Georgetown, and Bastrop, where price reductions are now the norm.
Nearly 60% of all active listings have recorded at least one price adjustment, reflecting the shift in negotiation leverage. Price reductions are not isolated to the outskirts—Austin itself shows 57.6% of listings with cuts, while fast-growing suburbs such as Liberty Hill (68.2%), Kyle (68.2%), and Lockhart (71.2%) lead in markdown frequency. This widespread discounting suggests that sellers are responding to tepid demand and longer market times, rather than isolated overpricing.
Housing Prices
Home prices across the Austin region continue to reflect downward pressure compared to their 2022 peak. The median sold price now stands at $449,000, a drop of 18.36% from the May 2022 peak of $550,000. The average sold price sits at $601,684, down 11.77% from the same peak period. This pricing reset has unfolded unevenly, with luxury and upper-tier homes showing modest appreciation year-over-year (+5.13%) while the lower quartile remains under stress, down 2.71% in price and 5.38% in price per square foot.
Year-over-year, the city-level breakdown shows 9 cities with median price gains but 20 cities reporting declines, reinforcing the broader theme of uneven performance and continued buyer advantage. For context, tracking the median sold price against levels from 36 months ago reveals a 4.47% decline, confirming that prices have not yet stabilized at a long-term growth baseline.
For buyers, this translates to more room for negotiation and a reduced urgency to compete, as sellers face extended listing periods and tighter financing conditions. For sellers, the message is clear: overpricing remains a costly mistake in today’s slower-moving market.
Regional Trends and Inventory Dynamics
Regional market data underscores just how much inventory expansion has changed the landscape. Across the Austin-area MLS, the Months of Inventory (MOI)—a key measure of supply versus sales pace—has risen to 5.78 months, a 14.1% increase year over year. This compares to 5.06 months at the same time last year and just 1.1 months at the peak of the 2021 housing frenzy.
Inventory growth is broad-based. From January to October 2025, cumulative new listings reached 44,064, marking a 3.2% year-over-year increase and 21.3% above the 25-year historical average. However, buyer activity has not kept pace. Cumulative pending contracts through October total 36,767, down 4.2% year over year despite remaining slightly above long-term norms.
The Monthly New Listing-to-Pending Ratio now stands at 0.66, meaning for every home that goes under contract, more than one and a half new listings enter the market. Historically, a balanced market sees this ratio closer to 0.82. This widening gap demonstrates how inventory continues to accumulate faster than it is being absorbed.
List-to-Sale Performance and Demand Indicators
Market absorption metrics show how dramatically demand has slowed. The Absorption Rate, which measures the percentage of active listings sold within a period, has fallen to 9.29%, compared to a historical average of 31.67%. In other words, less than one in ten homes on the market today is going under contract each month.
The Market Flow Score (MFS)—a composite measure of turnover efficiency—has dropped to 1.33, far below the long-term average of 6.57. This index integrates active-to-sold ratios, velocity, and absorption efficiency, effectively capturing how fluid the housing market is. A low score like this signals a sluggish environment dominated by excess supply and slower buyer decision-making.
Phases of the Market: Where Each Area Stands
Within the resale segment, Austin’s market clearly stratifies by zip code into distinct phases. As of late October, 11 cities and 27 zip codes fall into the “Contraction / Danger Zone” phase, with Activity Index readings between 15%–20%, where supply outpaces demand and price declines are ongoing. Another 14 cities and 26 zip codes are in the “Crisis / Freeze” range, where the index dips below 15%, indicating minimal buyer activity and accelerated pricing corrections.
Conversely, only one city and seven zip codes register within the “Equilibrium” band of 25%–30%, a level generally considered balanced. None currently fall into the “Expansion” phase above 30%. This distribution makes clear that the region, as a whole, is firmly entrenched in a buyer-leverage environment with localized stagnation.
Market Efficiency and Transaction Volume
Sales volume remains subdued relative to both historical norms and population growth. There were 2,402 closed sales in October, and 25,631 total from January through October, a 3.3% decline year-over-year. When adjusted for population, Austin’s housing market has recorded 1,002 home sales per 100,000 residents year-to-date, which is 20.9% below historical averages.
While raw sales volume shows only moderate year-over-year decline, the efficiency of the market—measured by turnover per active listing—has deteriorated. With more listings competing for fewer buyers, agents and sellers must rely on sharper pricing strategies and realistic timelines to secure offers. Builders continue to represent a disproportionate share of total activity, with new construction listings accounting for 26.5% of all inventory, compared to 16.6% for resale. This builder-heavy mix adds to supply pressure, especially in suburban corridors east and north of Austin where construction pipelines remain strong.
Long-Term Context and Market Positioning
From a long-term perspective, the Austin market’s 25-year compound appreciation rate of 4.97% remains consistent with steady historical growth. However, given the current median price of $449,000 and a prior peak of $550,000, a return to that previous high would take roughly 53 months under average appreciation conditions. That timeline is not a prediction of recovery—it simply frames how far below prior valuations the current market sits.
In short, today’s market is not collapsing, but it is rebalancing after a prolonged period of overextension. With supply outpacing demand, sellers must compete aggressively, and buyers can act with confidence that they hold most of the negotiating leverage.
Conclusion
Austin’s housing market as of October 23, 2025, reflects a clear and measurable shift toward buyer control. With 16,348 active listings, nearly 60% price drops, an Activity Index under 20%, and a 14% rise in months of inventory, the data shows a market still finding its equilibrium. The contraction phase continues to define most of the region, leaving buyers with choice, time, and leverage that was unthinkable just a few years ago.
