Austin Real Estate Market Update

Austin Real Estate Market Update – January 07, 2026

The Austin real estate market update for Wednesday, January 07, 2026 shows a market that continues to work through excess supply, weakened demand, and a longer path back to price stability. Active residential listings currently sit at 12,516, which is 14.7 percent higher than this time last year. While inventory has come down significantly from the June 2025 peak of 18,146 listings, the current level still reflects a market with more choices for buyers and more competition for sellers. Nearly 55 percent of all active listings have experienced at least one price reduction, reinforcing that pricing power remains limited across most of the metro.

Scroll down to view the full Austin Daily Real Estate Briefing PDF for Wednesday, January 07, 2026.

Breaking down inventory composition helps explain why pricing pressure remains elevated. Of the 12,516 active listings, 3,905 are new construction and 8,611 are resale homes. Builders continue to carry a meaningful share of inventory, which often leads to faster price adjustments, incentives, and concessions that ripple into the resale market. When new construction competes aggressively, resale sellers are forced to respond, even if their home is well located or recently updated.

Pending listings tell a more cautionary story. There are currently 3,023 homes under contract, which is down 8.3 percent year over year. This decline in pendings is important because it represents real demand, not just interest or showing activity. Fewer homes going under contract means absorption remains slow, and it confirms that buyers are still selective and price conscious. Of those pending listings, 1,245 are new construction and 1,778 are resale properties, showing that resale demand remains softer than what many sellers expected heading into the new year.

The Activity Index reinforces this message. Today’s overall Activity Index stands at 19.5 percent, down from 23.2 percent one year ago, representing a 16.2 percent decline in market activity. New construction continues to outperform resale with an Activity Index of 24.17 percent, while resale sits at just 17.11 percent. Historically, an Activity Index below 20 percent places most markets in the contraction or danger zone. This is the phase where inventory builds faster than demand, marketing times stretch out, and pricing adjustments become more common.

When the resale Activity Index is broken into market phases, the picture becomes clearer. A significant share of Austin area cities and zip codes now sit in contraction or crisis zones, where buyer hesitation and affordability constraints limit transaction velocity. Very few submarkets fall into expansion or equilibrium ranges. This distribution explains why sellers are struggling to regain pricing power even as inventory slowly declines from last year’s highs.

The new listing to pending ratio further confirms demand weakness. The current monthly ratio is 0.46, which is dramatically below the 25 year average of 0.82. This means fewer than one out of every two new listings is converting into a pending sale in the same period. On a year to date basis, new listings exceed pending listings by 210 homes. While that gap is not extreme by historical standards, it signals that supply continues to slightly outpace demand as the year begins.

Months of inventory provides another critical lens. Austin currently sits at 4.44 months of inventory, up from 3.82 months one year ago, a 16.3 percent increase. This places the market firmly in buyer advantage territory. When focusing only on resale inventory, a growing number of cities and zip codes are pushing into buyer control ranges, where homes can sit for extended periods unless priced aggressively and marketed well.

Despite rising inventory, pricing has not collapsed. Instead, prices continue to grind lower in a controlled correction. The average sold price in December was $572,526, down 16.04 percent from the May 2022 peak of $681,939. The median sold price tells an even clearer story, currently at $434,941, representing a 20.92 percent decline from the May 2022 peak of $550,000. These declines reflect a market that overshot during the pandemic era and is now recalibrating to affordability limits.

Comparing today’s median price to levels from 36 months ago shows prices are down 3.35 percent over that period. This means that despite years of inflation, wage growth, and population gains, real pricing power has weakened. Over the long term, Austin’s 25 year compound annual appreciation rate sits at 4.647 percent. Using that historical growth rate, if the market has already reached its correction bottom at $434,941, it would take approximately 63 months, or until February 2031, to return to the prior peak of $550,000. That projection underscores how long recovery cycles can take after rapid appreciation phases.

Price performance also varies by segment. The bottom 25th percentile of homes saw prices decline 3.34 percent year over year, with price per square foot down 4.08 percent. Meanwhile, the top 25th percentile experienced a modest 1.63 percent price increase, although price per square foot still declined 2.12 percent. This divergence highlights that higher end homes with strong locations and quality construction are holding value better than entry level and mid range properties.

City level data reinforces the broader trend. Only seven cities posted year over year median price increases, while twenty three recorded declines. This widespread softness confirms that the correction is not isolated to one neighborhood or price band but is affecting most of the Austin metro.

Demand metrics further support this conclusion. The absorption rate, also known as the sold to active ratio, currently stands at 23.21 percent, well below the historical average of 31.61 percent. This lower ratio means fewer listings are converting into closed sales relative to available supply, which places continued pressure on sellers to adjust expectations.

Interestingly, the Market Flow Score currently reads 8.53, above the historical average of 6.59. This suggests that while overall demand is weak, the market is still functioning efficiently in terms of turnover where pricing aligns with buyer expectations. Homes that are priced correctly and marketed well are still moving, even if the broader market feels sluggish.

For buyers, today’s Austin housing market offers leverage, choice, and negotiating power not seen in years. Price reductions are common, inventory is elevated, and sellers are increasingly open to concessions. For sellers, success requires realism. Overpricing leads to longer days on market and multiple reductions, while accurate pricing upfront remains the most effective strategy. For investors, the data suggests patience. Rent trends, price corrections, and longer recovery timelines mean disciplined underwriting is critical.

For agents, this environment demands sharper pricing guidance, deeper market education, and honest conversations with clients. The days of rapid appreciation masking pricing mistakes are gone. Execution and data driven strategy matter again.

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FAQ SECTION

Is the Austin housing market crashing in 2026

The Austin housing market is not crashing, but it is clearly correcting. Prices are down roughly 21 percent from the 2022 peak, inventory remains elevated, and demand is weaker than historical averages. These conditions reflect a normalization after years of rapid appreciation rather than a sudden collapse. The data shows a slower market that rewards accurate pricing and disciplined buyers.

Is Austin still a buyer’s market right now

Yes, Austin is firmly a buyer’s market based on current data. Months of inventory are above four months, the Activity Index is below 20 percent, and more than half of listings have had price reductions. Buyers have more leverage, more choices, and more negotiating power than they have had in several years. Sellers must compete aggressively to secure contracts.

What does the Activity Index tell us about demand

The Activity Index measures how many active listings are going under contract. At 19.5 percent, the index shows that demand is weak relative to supply. Historically, markets below 20 percent experience slower sales, longer marketing times, and downward pricing pressure. This helps explain why price reductions remain common across the metro.

How long will it take for Austin home prices to recover

Based on Austin’s long term appreciation rate of 4.647 percent, returning to the prior peak could take over five years if prices have already bottomed. This projection assumes steady economic conditions and no major shocks. Recovery timelines are typically longer after periods of extreme appreciation. Buyers and investors should plan with a long term horizon.

Are higher priced homes performing better than lower priced homes

Yes, higher priced homes are showing more stability than entry level properties. The top 25 percent of homes saw modest year over year price growth, while lower priced homes experienced larger declines. However, even higher end homes are seeing reduced price per square foot. Quality, location, and pricing discipline remain critical at all levels.

Have a Question or Want to Dive Deeper?

If you’d like a custom breakdown of the data, want help interpreting today’s market trends, or just have a question about buying or selling in Austin, let us know. Fill out the form below and a member of our team will get back to you promptly.