The Austin housing market, once a seller’s paradise with bidding wars and skyrocketing prices, remains in flux amid affordability issues, high interest rates and tapered demand, but inventory hit a peak.
The five-county Austin metro had a 4.9-month supply of homes in May, its highest level in 13 years, the Austin-American Statesman reported, citing data from the Austin Board of Realtors.
Last month’s figure creeps closer to the six or six-and-a-half-month supply range that’s typically considered a balanced market. The median sales price dipped 0.4 percent year-over-year in May to $459,450.
While a more balanced market is generally positive, experts caution against celebrating a full-blown buyer’s market. The number of sales in the Austin region dropped by 12.8 percent year-over-year in May to 2,968, largely due to the steep rise in mortgage rates since late 2022.
Open houses and buyer inquiries have dropped significantly, with some agents like Keith Trigaci of Compass reporting a struggle to even get buyers through the door. Many would-be sellers are still holding onto their properties before braving the high-interest rate environment.
The picture within the city limits paints a slightly different story, with 1,038 home sales marking a 2.4 percent increase from May 2023.
The median closing price in Austin continues to climb, rising 11.6 percent year-over-year in May to $608,438. Though, that’s still below the record high of $667,000 set in May 2022.
Analysts see this shift as a return to normalcy after a period of unsustainable growth fueled by factors like the pandemic and booming tech industry. Higher interest rates and a slowdown in tech company hiring have reduced the influx of relocation buyers who typically purchase pricier homes. Eldon Rude, a longtime housing market expert with 360° Real Estate Analytics, points to these factors as the most significant contributors to the market adjustment.
While some buyers may be discouraged by stubbornly high interest rates and potentially overpriced listings, experts predict a slowdown in price appreciation rather than a crash.
“Price appreciation has slowed in Texas, but should continue to go up some in 2024, just not as aggressively as the last five-plus years,” said Mark Sprague, a housing industry expert with Independence Title in Austin. “With job creation continuing strong in Texas, there is not enough housing inventory.”
—Quinn Donoghue
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