Strong Q1 Momentum

And the Headwinds Agents Can't Ignore

Austin Real Estate March 16, 2026 | Team Price

The Leading Indicators Are Doing Their Job

Seven out of ten weeks into 2026, the Austin market has outperformed the same week from 2025 on the new listing-to-pending ratio. That is not a streak built on optimism. It is built on data. January closed at a ratio of 0.75, beating 2025's 0.69. February closed at 0.79, beating January's 0.75. And March — with a month-to-date ratio already at 0.57 at the halfway point against last year's full-month 0.71 — is tracking toward a third consecutive month of outperformance. The new listing-to-pending ratio is exactly what it sounds like: for every new property entering the market, how many are going under contract? A ratio climbing toward 1.0 means demand is absorbing supply at an accelerating rate. That is what the first quarter of 2026 is confirming, week after week.

This week's live update showed 238 pending properties as of Monday morning, with active under contract at 479. The current ratio opens the week at 0.47 — low, as Monday updates always are — but the trajectory over the next two to three weeks as agents update prior-week statuses is expected to push it past last year's 0.73 for the same period. The recent move in mortgage rates from a low of 5.875% back up to 6.375% introduced a visible but modest pullback in near-term activity. The bond market offered some relief Monday morning, down 4.4 basis points, recovering a portion of Friday's losses.

Active Listings, Pending Volume, and the Activity Index

Active listings across the Austin market sit at 14,299, up 7% year over year. Pending listings have crossed 4,500, landing at 4,531 — a 7.3% year-over-year increase. When pending growth outpaces active listing growth, the activity index moves in one direction: up. The activity index measures the rate at which the market is absorbing available inventory — calculated by dividing pending and active-under-contract listings by total active plus pending. Across all categories, including resale and new construction, the combined activity index is 24.1%. On resale specifically, that number is 20.93%, clearing the 20% threshold that separates a sluggish market from one with real momentum. New construction is running at 31.47%. Of the 75 zip codes tracked, 24 are above 25% and roughly 19% are above 30%, with Round Rock posting the market's highest city-level activity index at 30.51%.

Months of inventory for the Austin area sits at 5.08, but that headline number is almost meaningless on its own. The range across the 75 tracked zip codes runs from 1.6 months in 78739 to 48 months in 78616 (Dale). The city of Austin proper is at 5.43 months — down 9.2% year over year, meaning conditions in the core city are actually tighter than this time last year. Quoting the metro average is the statistical equivalent of saying the average temperature in America is 65 degrees. Your job is to calculate the activity index and months of inventory for the specific product type and price point your client is buying or selling. That is the only number that matters.

The Headwinds Worth Acknowledging

The momentum picture is real — and so are the headwinds. Short sale listings in the Austin market have gone from 44 in March 2025 to 94 in March 2026 — a 113% increase. That number alone would be notable. What makes it worth a harder look is what is not showing up in the MLS. Tax records identify 254 pre-foreclosures, 1,497 properties at auction, and 726 bank-owned REO properties. The MLS, by comparison, shows 12 pre-foreclosures, 8 auction properties, and 90 REOs. The gap between what tax records document and what the MLS is marketing sits at 95.6%. That is not a data error. Banks learned from 2008 through 2010 that flooding the MLS with distressed inventory destroys comps for everyone. They are deliberately managing this off-market, and that is happening right now.

The recent legislative ban on institutional investors adds a new variable to this picture. Firms like BlackRock, Citadel, and Invitation Homes were historically significant buyers of distressed off-market inventory. Remove that buyer pool and servicers face pressure to route more properties through auction platforms and eventually the MLS. We are already seeing early signs of that pipeline beginning to open — properties with foreclosure history on Xome and Auction.com that did not sell through those channels are beginning to appear in the MLS. The rate at which distressed properties are entering tax records has increased from roughly 10 per week in Q4 2025 to 17.2 per week in Q1 2026. This is a trend to watch, not panic over. But it is not something to wave away.

Pricing, Percentile Dynamics, and City-by-City Performance

On pricing, March is historically one of the strongest months of the year — 21 of the past 25 Marches have been positive — and this year is tracking exactly that. The average closed price is up 7.6% month over month. The median closed price is sitting just under $450,000, which is essentially the same level as 36 months ago and just 1.3% above pre-pandemic pricing adjusted for inflation. A trend fair value model using Austin's historical compound appreciation rate of 4.8% places the entire market within 0.4% of where it should be. The overall Austin market is fairly valued right now. Of 30 cities analyzed, 17 remain historically overvalued, 13 are fairly valued, and Lockhart is the one city currently registering as undervalued.

A shift in the percentile demand data deserves attention. Historically, the top 25th percentile of the market outperformed the bottom 25th percentile in price appreciation — higher-priced properties were propping up the overall median. That dynamic has flipped. The top 25th percentile is now underperforming the bottom 25th percentile by 2.1%. Rate-sensitive buyers at lower price points are responding to improved affordability, and that is showing up in demand. The concern is the downstream math: if the top 25th percentile declines by more than 3.5 to 4%, the overall median moves down quickly — particularly when the bottom 25th percentile is not appreciating strongly enough to offset it. Demand is building, but pricing pressure remains.

Seven cities are up in value on the median sold price so far this year: Bastrop, Burnet (up 15%), Adele (up 12%), Lago Vista (up 5%), Liberty Hill (up 1.8%), Smithville, and Wimberley — which has now officially reached an all-time high median sold price of $600,000 and ranks second among the top 30 cities for performance. Dale is the top performer across the entire market. The city of Austin is down 5.1% on the median sold price year to date.

Economic Calendar and the Rate Outlook

The Federal Reserve meets this week and is expected to hold rates steady at 3.75%. The employment numbers have been soft but not at the level that would force a cut — weak, not Canada-weak. Canada lost over 80,000 jobs in their most recent employment report, and their central bank has far more runway to cut than ours does. The inflation picture is the other side of that equation, with core PPI data out Wednesday alongside the Fed's dot plot. The dot plot is the quarterly projection chart where each Fed member marks where they expect the federal funds rate to go over the next one, two, and three years. When those dots cluster lower, mortgage rates tend to follow. Wednesday also brings mortgage application data, making it the most consequential single day on the calendar this week.

The NAHB/Wells Fargo Housing Market Index, published this morning, showed the prospective buyer traffic component rising from 22 in February to 25 — a year-over-year gain of 4.2% in new home buyer walkthrough traffic. February's reading of 22 was the worst going back to 2012. The move to 25 is modest but directionally meaningful. Builders are also pulling back on new inventory releases in response to current demand, which is keeping new construction from becoming a supply problem.

The absorption rate is 17.49%, up from 14.8% at the start of the year. The market flow score — a 0-to-10 index of overall market health — is being watched closely for April. That is when the monthly ratio is expected to begin outperforming 2025, potentially marking the start of a confirmed four-month rebound cycle. The first quarter is closing strong. The headwinds are real. Both things are true at the same time.

QUESTIONS AND ANSWERS

Q: You've shown seven out of ten weeks outperforming 2025 on the ratio. At what point does that become a confirmed trend rather than just encouraging data?

A: Four consecutive months of the monthly new listing-to-pending ratio outperforming the same month from the prior year. That is the threshold. We have three months in a row right now — January, February, and March tracking ahead of 2025 — and April is the one to watch. April 2025 saw the ratio collapse to 3.84. If this April holds above that, we start talking about a confirmed rebound pattern with real confidence. Until then, the data is encouraging, the momentum is real, and we keep tracking week by week.

Q: I have a buyer who was pre-approved when rates were at 5.875% and is now looking at 6.375%. Should they wait it out?

A: Waiting has a real cost that most buyers underestimate. Rates moved half a point — that affects monthly payment. But so does purchase price, and the demand data suggests prices at the lower end of the market are under upward pressure as the year progresses. Pending volume is up 7.3% year over year. Open house traffic is at levels not seen in years. If your buyer is sitting on the sidelines waiting for rates to return to 5.875%, they may be paying more for the property when they get there. The lock-and-float strategy — locking a rate now with the option to float down if rates improve — is worth a serious conversation with their lender before Wednesday's Fed decision and dot plot release. The bond market moved in a favorable direction Monday morning. Wednesday will tell us more.

Q: Short sales have more than doubled year over year. As a seller, what does that actually mean for my home's value right now?

A: The 94 short sale listings currently visible on the MLS are a fraction of what tax records show exists. Ninety-five point six percent of the documented distressed inventory is being managed off-market deliberately — banks have no interest in repeating the 2008 through 2010 cycle of flooding the MLS with distressed properties and destroying comps at scale. The risk is not what is on the MLS today. The risk is the pipeline: if servicers lose their institutional investor buyer pool — which just got smaller after last week's ban — and are forced to route more of that inventory through auction sites and eventually the MLS, comps start to feel it. If you are a seller in a price point or zip code where inventory is already elevated, this conversation needs to happen before it becomes a comps problem. If you are in a low-inventory zip code with a strong activity index, this headwind is far less relevant to your specific situation.

Q: The activity index and months of inventory seem to tell opposite stories right now. Which one should agents trust?

A: They are measuring different things, and you need both. Months of inventory tells you how long it would take to sell everything currently active at the current pace of closed sales. The activity index tells you how fast the market is moving right now, in real time. The reason they can appear to tell different stories is that months of inventory can look elevated during a period of high new listing volume even when the market is absorbing inventory at an above-average rate — which is exactly the situation we are in. We have 5.08 months of inventory at the metro level and a 24.1% activity index. Those two numbers together tell a story that neither one tells alone. Run both for your client's specific product type and price point. That is where the actual answer lives.

Q: The percentile analysis showed that the top 25th percentile is now underperforming the bottom 25th percentile. What should agents do with that information on a listing?

A: First, know where your listing lands in the percentile distribution for its zip code. If it is in the top 25th percentile of its market, that segment is currently seeing softer demand than the lower price tiers. That does not mean the property cannot sell — it means pricing strategy, days-on-market tolerance, and concession expectations need to reflect that reality. The overall median can look flat while the segment your listing sits in is actively losing ground. If the top 25th percentile drops by more than 3.5 to 4%, the whole median moves down fast. Agents managing listings in that upper tier need to be proactive about pricing and aggressive about time on market right now, not reactive two price drops from now.

Q: I keep hearing about the distressed properties that aren't on the MLS. Is there any way to find them, and should I be trying to?

A: Yes, and yes. Tax records are public. Sites like Xome, Auction.com, and Realty Bid are the first stop for properties in the pre-foreclosure or REO pipeline before they reach the MLS — or instead of the MLS. When you see a property appear on the MLS that previously had activity on one of those platforms, that is a signal that the servicer tried the off-market route and it did not work. Those listings often come with motivated sellers and price flexibility. For investor clients, this is exactly the pipeline to track. Run the property history on anything that looks underpriced or that has sat longer than its activity index would predict. The answer is usually in the record.

Q: Wimberley hit an all-time high while Austin is down 5.1% year to date. How do I explain that kind of divergence to a client who thinks of it all as 'the Austin market'?

A: The Austin market does not exist. There are 75 markets. Wimberley has reached a new all-time high median sold price at $600,000 because its supply is structurally constrained — limited buildable land, strong lifestyle demand, and buyers who will pay a premium to be there regardless of what is happening in the broader metro. The city of Austin, by contrast, has seen more new inventory enter the market and is working through that supply at a price point where buyers have options. One zip code has 1.6 months of inventory. Another has 48. Those are not versions of the same market with different temperatures. They are fundamentally different markets that happen to share a regional label. When a client uses the phrase 'the Austin market,' that is the moment to stop the conversation, open the data, and show them exactly what their specific market is doing.

The first quarter of 2026 is closing out ahead of 2025 on every leading metric that matters — and that story is being confirmed by data, not sentiment. The leading indicators are doing what leading indicators are supposed to do: pointing the direction before the lagging numbers catch up. Pending volume is up 7.3% year over year. Open house traffic is at levels not seen in years. The absorption rate is climbing. That is the foundation. The headwinds — a growing shadow inventory of distressed properties operating largely outside the MLS, a flipped percentile demand dynamic, and rate sensitivity that is clearly visible in this week's pending count — are real, are being tracked, and will affect some markets more than others. Your job this week is to know which market your client is actually in, because that answer is different in every zip code and at every price point.

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