Real Estate Report

Austin home sales dip following the market's hottest summer ever

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Is the Austin market headed for a slow fall selling season?

Photo courtesy of GoodLife Realty

After the hottest summer selling season on record, Austin home sales have cooled down. That's according to the latest monthly report from the Austin Board of Realtors, which shows that home sales in the city of Austin — and the greater metro area— declined in September 2017.

In Austin proper, sales decreased 4.1 percent year-over-year, to only 719 homes sold. The Austin-Round Rock metro area saw a similar decline of 4.3 percent, with 2433 homes sold. At the same time, prices continued to rise. Median home prices hit $355,000 in Austin (up 4 percent from September 2016) and $291,464 in the metro (up more than 5 percent from the previous year).

Should we expect this slump to continue into 2018? Not necessarily, says Brandy Guthrie, ABoR president.

"Despite last month’s dip in home sales activity, it’s important to remember that we’re comparing our current figures to the record-breaking housing market activity in 2016 and it’s not necessarily indicative of a downturn," she says in a release.

Lawrence Yun, chief economist for the National Association of Realtors, agrees. "Home sales, based on recent past job creation, should continue to modestly increase in 2018. Home sales in 2019 will depend critically on inventory availability."

According to the report, Austin housing inventory remained unchanged in September 2017 (2.4 months), and the metro area saw only a slight increase to three months. Keep in mind, a balanced housing market boasts six months of inventory.

In Austin, single-family homes priced above $300,000 had the highest levels of inventory, reinforcing ongoing concerns about affordable housing in the Capital City.

"Steady depletion of housing inventory is resulting in a fast rise in home prices and affordability challenges," Yun says. "The construction of single-family homes as well as condominiums needs to ramp up higher in order to fully satisfy housing demand and maintain housing affordability."

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Homebuyers can afford to be picky as Austin housing inventory rises

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Housing economist Clare Losey said the most significant factor affecting home sales in Austin is high mortgage rates.

The latest real estate report from Unlock MLS and the Austin Board of Realtors (ABoR) has revealed housing inventory is still on a steady rise in the Austin-Round Rock-San Marcos MSA, creating more choices for potential homebuyers as they navigate a high interest rate market.

Residential home sales dipped by a mere 1.5 percent year-over-year from October 2023, amounting to 2,248 closed sales in the Austin-Round Rock-San Marcos MSA. Median prices have also dropped to $430,000, or 3.2 percent less than this time last year. More than 3,300 new home listings were added on the market — a 7.4 percent increase from 2023 — bringing the total number of active home listings to 11,599.

According to Unlock MLS and ABoR housing economist Clare Losey, Ph.D., October's mortgage rates stood at 6.4 percent and are showing no signs of a significant drop in the near future. Even heading into 2025, Losey says potential homebuyers who are biding their time in the hopes of seeing rates plummet "may be in for a long wait."

"In the meantime, sellers must recognize that bringing buyers to the table requires a more aggressive pricing approach," Losey said. "Even in a more balanced market, buyers with limited purchasing power are struggling to meet current price expectations."

As for the overall health of the Central Texas housing market, 2024 Unlock MLS and ABoR president Kent Redding labeled recent news reports that called Austin "ground zero" for a downturn as an "extreme over-exaggeration."

"Austin led the state and nation in record-breaking home price growth and sales activity during the pandemic," Redding said. "For three years, near-zero housing inventory, numerous offers above list price and a rapid-paced market raised home prices and left little negotiating power for buyers. During this record-setting growth, ABoR and Unlock MLS consistently emphasized the unsustainability of the rapid growth, and now, our market is working to balance those extremes."

Central Texas housing trends in October 2024

In Travis County, 979 homes were sold last month — a slight 2.5 percent increase from last year. Median prices remained flat year-over-year at $510,000. Active home listings continued growing to 5,702 homes, which is 9.4 percent more year-over-year.

In Williamson County, 807 homes were sold in October, with median prices steadily dropping to $420,000. There were 1,028 new home listings on the market, showing a 4.5 percent increase from October 2023, bringing the total number of active home listings to 3,369.

Residential home sales dropped by nearly eight percent in Hays County in October, totaling 315 sales. Median prices also fell 5.5 percent year-over-year to $359,000. Active listings rose 6.6 percent year-over-year to 1,740 homes with the addition of 534 new listings on the market.

Meanwhile, 114 homes were sold in Bastrop County last month, which is 4.4 percent more than this time last year. Median prices dropped by a single percentage point year-over-year to $355,000. There were 654 active listings on the market in October, and 152 new home listings, representing a 1.3 percent slip in new inventory when compared to last year.

Only 33 homes were sold in Caldwell County in October to reflect a near 14 percent decline year-over-year from October 2023. Median prices fell to $262,990, which was a 13.5 percent decrease from last year. There were 136 active homes on the market last month, and 40 new homes added on the market.

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