Red-Hot Real Estate

Austin housing market sets new record as median home price hits $575,000

Austin home prices are going one way: up.

Photo by David Hensley/Getty Images

The hot, hot Austin housing market is establishing its “new normal,” with another record-breaking month in the books.

The latest monthly report from Austin Board of Realtors, released July 15, reveals record-setting sales at the metro level, and, yet again, record-setting prices at the city level.

Last month, home sales in the Austin-Round Rock metro were up 8.6 percent over the previous year, hitting an all-time high for any June on record, ABoR notes. A total of 4,369 homes were sold across the metro, which “contributed to an increase of 16.5 percent to 19,991 home sales during the first half of 2021,” ABoR says.

Meanwhile, the metro’s median home price grew 35.4 percent year-over-year to $440,000, a figure that is actually lower than the median price recorded in May ($465,000).

But in the city of Austin itself, prices were once again on the rise, with the median home price climbing to an all-time high of $575,000 — a whopping 30.9 percent jump from June 2020. As a reminder, in May, the median home price hit a then-record of $565,000.

At the city level, home sales were up 16.9 percent year-over-year (1,374 homes sold), also setting a record for the month of June, ABoR says.

Across Austin-Round Rock, homes spent a mere 13 days on the market last month, compared with 46 days in June 2020.

“As new homes are listed, they are quickly going under contract,” ABoR says.

Don’t expect the red-hot market to cool down any time soon. ABoR president Susan Horton refers to these trends as the “new normal.”

“In June and in the first six months of the year, we saw a confirmation that Austin’s housing market is one of the strongest in the nation,” Horton says. “Our market has established its own new normal, as median prices climb while inventory remains low. With the unprecedented growth our region continues to experience, we can expect these trends to continue.”

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How Austin fits into Zillow's predicted housing market growth in 2025

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Potential homebuyers in Austin may see improving mortgage rates and home prices in 2025, according to Zillow.

It looks like a few more people are about to turn their online home shopping daydreams into reality in 2025. Zillow, the famous real estate listings website, says in a press release that next year will likely bring "a gradual but bumpy decline in rates, impacting sales and price growth."

It attributes the forecast to "erratic and dramatic mortgage rate movements" throughout 2024, which will continue to affect the market. The website's housing market predictions report estimates that 2025 will see about 100,000 more sales than 2024, that home value growth will be "low and slow" at 2.2 percent, and that inventory and new listings will continue recovering from pandemic weakness.

On a local scale, Zillow's latest data shows Austin has already experienced a 3.4 percent drop in annual average home values from 2023 to 2024, which will continue fluctuating in 2025.

As of November, Zillow's home value index says the average home in the Austin metro is worth $443,995. That figure is greater than the Austin Board of Realtors' median home sales price in Austin-Round Rock-San Marcos, which came out to $435,000 last month, reflecting an estimated 2.4 percent increase for just the month of November year-over-year from 2023.

Pick the right season to buy
Potential buyers may see better opportunities for purchasing a home during the fall and winter, which is a typically slow season for home sales. Across 36 out of the 50 biggest U.S. metro areas, Zillow's heat market index showed a drop in competition from October to November.

"There's a strong sense of déjà vu on tap for 2025. We are once again expecting mortgage rates to get better gradually, and opportunities for buyers should follow, but be prepared for plenty of bumps on that path," said Zillow chief economist Skylar Olsen in the release. "Those shopping this winter have plenty of time to choose and a relatively strong position in negotiations."

Zillow suggests buyers may have the ability to negotiate "from a position of safety" during the slow winter months. This is especially true for Austin-area buyers, who only saw 10.4 percent of homes sell for more than their listing price in October. The website says buyers can take advantage of opportunities to buy contingent on inspections or repairs, and they may avoid bidding wars during this time.

"While the number of options available to shoppers today are lower than they will likely see in the spring, there's also less competition in the field," the report says. "The [national] share of homes that sold for more than list price was below 28 percent in October (the latest data available), continuing a downward trend that began in July."

Buyers will head to the Southwest
Eyes are also turning to the American Southwest as the top region for homebuyers in 2025, as 13 major metro areas – including Austin and San Antonio – are now considered “buyer’s markets” where buyers have more negotiating power than sellers.

However, this prediction depends on the gravity of falling mortgage rates. Homebuyers should also keep a close eye on mortgage rates in 2025, which could drop unpredictably like they have been for the last three weeks in a row. If the rates dip further than expected, that doesn’t bode as well for buyers.

“It is anticipated that a significant mortgage rate dip would bring more buyers than sellers back to the market, increasing competition and tilting negotiating power in favor of sellers,” Zillow says.

Small-home living is gaining traction
As Austin and other major cities are battling for more high density housing, buying trends are also leaning towards smaller (and more affordable) homes.

Zillow even goes as far to say that the “pandemic-era need” for large houses is officially a thing of the past.

"The term 'cozy' is appearing in more listing descriptions — 35 percent more in 2024 compared to 2023 — reflecting current design trends that have shifted away from cavernous open floor plans, toward contained spaces that have their own style and purpose," the report says.

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