Are We There Yet?

There would be a market recovery, and no we're not there yet. But the data points signal we might be as the year progresses. The Austin-Round Rock metro has been in correction mode for the last few years. As interest rates rose from 2023 onward, affordability eroded, buyers retreated and prices plummeted. At this point the current data is signaling a more balanced market. Buyers have re-engaged with the market as evidenced by the increase in pending contracts, active inventory being absorbed, and prices stabilizing. Are we poised for recovery? We could be if the spring market momentum continues. That still remains to be seen.

We use various measure to determine the state of the market. One is the Market Turnover Efficiency Score (MTES) showing how efficiently listings go under contract. The three other leading indicators currently showing positive movement are: the 3.5% YoY increase in pending homes, less new listings, and active inventory in City of Austin down sharply by 13.7%. All of this data points in a positive direction. The MTES just hit 15 in April, the first reading above 14 percent since April 2024. For there to be a true market turnaround, the MTES needs to hold in the 14 to 18% range for multiple consecutive months.

The inventory side of our market is also moving in the right direction. Last year, month after month, new listings were adding tangible increases to inventory levels, peaking to over 18,000 listings in June. The number of pending contracts in 2025 were not able to absorb all those active properties. Many were withdrawn and others leased. Currently active inventory is up only slightly in the greater metro, and down sharply in the City of Austin. Nearly one third of all zip codes have low inventory levels which indicate a seller edge.

Two other leading indicators are activity index (what % of active listings are going under contract) and new listing to pending ratio (what % of new listings are going pending) The activity index has increased 1.6% YoY and currently sits at 24.1%. The chart below explains the different stages of this index and the numbers for each of the 75 zip codes in the metro. 19% of the zip codes are in expansion phase, and 16% in equilibrium. We haven't seen this for quite some time.

Looking at data year-to-date, the chart below shows new listings are down 2.1% YoY, pending contracts are up 2.9% YoY, and absorption has improved to 0.83. Buyer demand continues to outpace supply compared to last year as spring momentum remains strong.