Austin Housing Market Correction Deepens: Inventory Surges as Buyer Demand Stalls

The Austin housing market continues its shift firmly into buyer's market territory as of June 20, 2025. With 17,825 active residential listings now on the market—surpassing the previous all-time high set just four days earlier—housing supply is at unprecedented levels. This sharp rise in available inventory coincides with weak buyer activity and declining pricing power, signaling continued downward pressure on home values. A closer look at this week’s data reveals the growing imbalance between supply and demand and helps contextualize the long-term recovery path ahead.

The most immediate headline is the record-setting 17,825 active listings across the Austin-area MLS. Compared to the prior high of 17,750 recorded just days earlier on June 16, this marks another step higher in an already saturated market. Moreover, more than half of all listings—55.6%—have experienced price drops, up slightly from earlier in the week. This volume of markdowns demonstrates that sellers are not only listing more properties but are actively repositioning them in response to sluggish buyer engagement.

The Activity Index, which measures the proportion of properties under contract relative to the total number of active and pending listings, has declined to 20.4%. This figure is notably down from 24.4% at this same point in 2024, a year-over-year drop of 16.3%. The decline in the index underscores how much demand has cooled, even as inventory has expanded. Concurrently, the Months of Inventory metric has climbed to 6.30 months, up from 5.31 in June 2024—a year-over-year increase of 18.6%. With the inventory threshold for a buyer’s market set at seven months, Austin is rapidly approaching that designation across the board.

In terms of listing flow, cumulative new listings from January through June now total 28,188, which is 25.4% above the long-term average and up 2.2% compared to the same period in 2024. However, this supply increase has not been matched by buyer activity. Cumulative pending sales year-to-date have fallen to 21,395, which is 11.6% lower than last year and 2.0% below the long-term average. This widening gap between new listings and pending sales—currently a difference of 6,793 units—highlights the strain on absorption and suggests continued buildup of unsold inventory.

The new listing-to-pending ratio, a key indicator of market balance, is currently 0.57. For context, the 25-year historical average for this ratio is 0.81. A lower ratio reflects a slowdown in contract activity relative to listings coming online, and Austin’s current figure is significantly below average. The year-to-date ratio is slightly better at 0.66, but still far beneath the norm. In short, more listings are arriving on the market than are being absorbed, pointing to sustained pressure on pricing.

Price trends confirm this narrative. The median sold price has now fallen to $460,000, representing a $90,000 drop from the May 2022 peak of $550,000, or a 16.36% decline. The average sold price has dropped from a high of $681,939 in May 2022 to $600,067—down 12.01%. While prices had briefly stabilized earlier in 2025, the ongoing inventory swell and contracting demand continue to erode seller pricing power. Tracking median sold prices against figures from 36 months prior, the market is down 14.02%, further reinforcing the scale of this multi-year correction.

Sales density remains weak. There were 2,771 closings in June, and the total number of homes sold from January through June is 14,912. While this total is 7.9% above the long-term average, it is 6.7% lower than the same period last year. On a per capita basis, home sales have dropped 20.3% compared to historical averages, with 585 sales per 100,000 residents. Similarly, sales per 1,000 Realtors stand at 802, which is 24.4% below historical norms. This reflects the challenges agents are facing in closing deals amid buyer hesitation and stricter lending conditions.

The spread between the upper and lower ends of the market shows that price compression is occurring across all segments. The bottom 25th percentile has seen a 3.6% decline in price and a 4.6% drop in price per square foot. The top 25th percentile is not immune either, posting a 1.5% reduction in price and a 1.9% decline in price per square foot. This broad-based depreciation confirms that the correction is systemic, not limited to any one price tier or submarket.

From a forecasting perspective, if the market has reached its correction floor at a median price of $460,000 and resumes the long-term compound appreciation rate of 5.073% annually, it would take approximately 46 months—or until March 2029—for values to return to their prior peak of $552,113. This timeline underscores how drawn-out recoveries can be following a sharp deceleration, even when supply eventually tightens.

Additional indicators paint a similarly cautious picture. The Market Health Index remains under 30%, a level typically consistent with buyer-friendly conditions. The Inventory Stress Index sits at 7.1%, further confirming that the pace of inventory accumulation is outstripping demand. These figures validate the broader conclusion that buyers currently hold leverage, and that sellers must strategically price and position listings to generate meaningful activity.

Altogether, the data presents a clear story: the Austin housing market is enduring a deep and protracted correction marked by record-high inventory, declining activity levels, and ongoing price attrition. With new listings consistently outpacing pending contracts, the absorption imbalance is unlikely to resolve quickly. Sellers must be responsive to market signals, while buyers are increasingly in a position to negotiate terms and pricing. The road to recovery will be shaped by broader economic shifts, interest rate movements, and local employment trends—but for now, leverage clearly lies with buyers.

Scroll down to view the full Austin Daily Real Estate Briefing PDF for June 20, 2025.