Is Austin Real Estate Cooling? A 2025 Market Analysis Based on Real Data
Published | Posted by Dan Price
Is Austin Real Estate Cooling? A 2025 Market Analysis Based on Real Data
The Austin real estate market in 2025 is no longer moving at the fast pace that defined the pandemic years. After years of soaring prices, fierce bidding wars, and extreme inventory shortages, Austin is entering a phase of stabilization—or as many analysts now agree, a clear cooling.
According to the June 6, 2025 report from Team Price Real Estate, months of inventory (MOI) has climbed to 6.36 months, placing the market squarely in neutral-to-buyer territory. Historically, any value above five months suggests a market that favors buyers over sellers. This trend has developed rapidly over the past 24 months. In January 2022, inventory was just 1.0 months. By May 2025, inventory rose to 6.5 months, a figure not seen since the aftermath of the Great Recession.
This surge in inventory reflects a significant imbalance between supply and demand. More homes are being listed than are going under contract. According to Team Price’s New Listing to Pending Ratio report, active listings exceed pending sales by 12,948 units, the widest gap recorded in over 20 years. This imbalance is not seasonal noise—it’s a fundamental market shift. Buyers have more options, sellers have more competition, and pricing strategies must evolve.
One of the clearest signs of this cooling is how homes are selling relative to their asking prices. In the three-month period from March to June 2025, 67.6% of homes in Austin sold below list price, while only 15.2% sold above list. These trends extend to surrounding suburbs such as Round Rock (61.6% below list), Leander (63.0%), and Georgetown (65.3%). Even traditionally competitive central Austin neighborhoods like Zilker, Tarrytown, and Downtown now report that the majority of homes are selling under list. In 2021 and 2022, it was common to see over 30% of homes sell above ask—now that share is cut in half or more.
Another important shift is the time it takes to sell a home. In January 2025, the average days on market rose to 90 days, the highest level in a decade. And as of Q2 2025, about 42% of listings have been on the market for over 100 days. Longer market times indicate buyers are taking their time and are no longer under pressure to submit quick, aggressive offers. Sellers, on the other hand, face growing pressure to price competitively from the start or risk being left behind in an oversupplied market.
Vacancy rates are also a critical indicator of market health. In Austin, nearly 60% of homes sold in the spring of 2025 were vacant at the time of sale. This trend is even more pronounced in outlying areas: 77.7% in Kyle, 69.4% in Georgetown, and over 80% in Hutto. High vacancy rates suggest that many sellers are investors or builders who no longer occupy the properties and may be more motivated to sell quickly to avoid carrying costs. These listings often end up with price reductions and add to buyer leverage.
Historically, Austin’s market has gone through cycles of cooling and heating, but the current numbers place it among the more significant slowdowns of the past two decades. From 2005 to 2012, months of inventory often exceeded 6 months, especially during and after the financial crisis. That kind of inventory has now returned. With over 17,300 active residential listings reported in June 2025, Austin has more inventory than at any point since 2010.
Interest rates remain another core factor. In mid-2025, average mortgage rates are holding steady between 6.5% and 6.8%, compared to 2.75% in early 2021. The impact of this rise is dramatic. A $450,000 home at today’s rate results in a monthly mortgage payment over $3,400, compared to roughly $2,000 just a few years ago. This increase in cost significantly impacts affordability, especially for first-time buyers, and leads many households to wait, downsize expectations, or remain renters longer.
While this market shift is often described as a “cooling,” it’s not a crash; "yet". Prices are down significantly and the momentum has slowed; it's a severe and prolonged correction but not a crash just yet. Could a crash still occur? That could very well be the case; keep visiting our site for daily insight on what's happening in the Austin market. Homes are still selling, but with greater selectivity. Sellers need to put more effort into pricing, presentation, and flexibility. Buyers, in turn, have more room to negotiate, more listings to consider, and more time to act. The pandemic-era frenzy has ended, replaced by a market that rewards patience, caution, and value.
As we move into the second half of 2025, the key metrics to watch will be pending-to-listing ratios, days on market, and months of inventory. If inventory continues to build while pendings remain flat or decline, price reductions and longer selling periods will likely become the norm. This is not just a shift in numbers—it’s a change in market psychology. The Austin real estate market is now defined by buyer choice, seller competition, and rebalancing demand.
FAQ : Is Austin real estate cooling?
Q1: What does the gap between listings and pending sales mean in Austin’s 2025 housing market?
The large difference between the number of active listings and pending contracts is a clear indicator of a cooling market. In May 2025, Austin saw nearly 13,000 more active listings than homes under contract. This gap shows that supply is increasing faster than demand, which is usually a sign that buyers are either pausing due to affordability concerns or simply have more options to choose from. In such environments, prices often stabilize or decline, and sellers must compete more aggressively to secure buyers.
Q2: How does the average time on market reflect market conditions in Austin?
Homes are now taking an average of 90 days to sell, the longest in over 10 years. More than 4 out of 10 homes have remained unsold after 100 days on the market. This is a stark contrast to the pandemic-era rush when homes often sold in a week or less. Extended market time gives buyers more negotiating power and makes it harder for sellers to hold firm on price. It also increases carrying costs for vacant or investor-owned properties.
Q3: Are Austin homes consistently selling below asking price?
Yes. Over two-thirds of homes in Austin are selling below list price as of spring 2025. In hot markets, over-list sales are common because of bidding wars. In a cooler market like today’s, buyers are pushing back on pricing and negotiating discounts. This change affects all areas, from entry-level homes to luxury properties, and shows that the market is more price-sensitive than it has been in years.
Q4: Is the cooling limited to certain neighborhoods or price points?
No. The market slowdown is broad and affects nearly every part of Austin. In highly desirable neighborhoods like Downtown, Tarrytown, and South Austin, more than 70% of homes are selling below list. This cooling is not limited to the suburbs or more affordable price brackets. The slowdown reflects macroeconomic factors like interest rates and inventory, rather than localized trends.
Q5: How are interest rates shaping Austin’s real estate market in 2025?
Interest rates near 6.8% have raised the monthly cost of homeownership dramatically. For many buyers, this means adjusting expectations or pausing their search altogether. Higher financing costs limit what people can afford, which softens demand and leads to slower sales. Even though home prices haven’t dropped drastically, the overall cost of buying a home is now significantly higher than during the low-rate environment of 2020–2021. This is one of the main reasons Austin’s market is cooling in 2025.
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