Austin’s Supply-Demand Gap Worsens as Inventory Stretches Further Beyond Buyer Activity

The Austin real estate market continues to experience a pronounced and data-confirmed decoupling between supply and demand. As of Tuesday, July 29, 2025, the market is exhibiting conditions that real estate professionals and analysts would define as firmly buyer-favorable: elevated inventory, subdued buyer engagement, and continued price correction—all amidst historically high new listing activity. Today’s briefing confirms that while sellers continue to list homes aggressively, buyers are simply not keeping pace, and the statistical footprint of the market shows growing slack.

Let’s break down the major indicators shaping Austin’s residential housing environment and what it means going forward.

The inventory spike continues. Active residential listings reached 17,782, just 294 units below the all-time high of 18,076 set one month ago on June 27. This level of inventory is nearly 16% higher than the same time last year, when 2024’s active listings were at 15,348. The cumulative new listings for the year have climbed to 33,478, representing a 6.1% year-over-year increase and sitting 26.3% above the long-term average. Sellers are entering the market at a clip that far exceeds buyer absorption rates, a key sign that listing confidence is untethered from actual market demand.

That point becomes clearer when we evaluate the ratio of new listings to pending sales. The monthly ratio currently sits at 0.65—well below the 25-year average of 0.81. Year-to-date, that ratio is at 0.68. In simple terms, for every 10 homes listed this year, only 6.8 are going under contract. This is not just a temporary condition—it’s a structural imbalance that has persisted for several quarters now, pointing toward either a pricing reset or continued inventory expansion unless something changes on the demand side.

Pending contracts for July provide further context. This year’s total stands at 4,453—just 0.3% higher than the same point in 2024. While on the surface this may seem like a slight improvement, it actually highlights the underlying weakness: buyer activity is stagnant despite significantly higher inventory and widespread price reductions. Cumulatively, pending contracts from January through July total 26,566, which is 4.9% below 2024 levels. Despite increased options, buyers are hesitant, likely due to affordability, interest rate concerns, or economic caution.

One of the most sobering indicators in today’s report is the Activity Index. Currently at 20.0%, the index is down from 22.4% a year ago, representing a 10.7% decline. This drop reinforces the trend: inventory is not converting to contracts at a healthy rate. Historically, the Activity Index hovers around 25-30% in balanced conditions. The current figure suggests that 4 out of 5 listings are not seeing meaningful engagement in a given month. Simply put, homes are sitting longer, even with price cuts.

And yes—price cuts are widespread. A full 58.9% of all active listings across the Austin area have experienced at least one price drop. In some cities like Cedar Park, Liberty Hill, and Georgetown, the percentage of listings with a price cut exceeds 63%. This points to a market where pricing strategy is out of alignment with buyer willingness to pay. Even aggressive cuts are not triggering the kind of buyer reactivation we’d expect if demand were simply on pause.

Another concerning sign: the Months of Inventory has now risen to 6.34, up 16.6% from 5.43 just one year ago. The psychological and statistical thresholds for a buyer's market start at 6 months. Crossing that mark underscores the shift in leverage. Sellers, who had the upper hand for much of the past decade, are now finding themselves in prolonged marketing cycles and increased negotiation exposure. In certain cities like Smithville, Cedar Creek, and Lago Vista, inventory exceeds 11 months, meaning homes are sitting on the market close to a year without finding a buyer.

Despite rising supply, the number of sold properties continues to lag. July recorded just 2,754 residential closings. Cumulatively, 17,930 homes have sold year-to-date, which is 4.6% below 2024’s pace, though still 7.9% above the long-term average. That above-average performance is due more to the strong early-year months than current momentum. The sold-to-active ratio is a stark 12.12%, compared to the historical average of 31.84%. That metric alone confirms that we are not in a healthy turnover environment. Typically, anything below 20% signals a market tilted in favor of buyers.

Median and average sold prices continue to trend down. The median sits at $440,000, a full 20% or $110,000 below the May 2022 peak of $550,000. The average sold price is $581,151, down $101,000 from the $681,939 peak, representing a 14.78% decline. While these drops reflect broad affordability pressures, it’s important to note the degree to which prices have remained sticky despite demand deterioration. Only now are we seeing sellers respond with widespread pricing corrections. The question is whether they’re too late, especially with peak buying season winding down.

From an investment and historical appreciation standpoint, we are also at a critical inflection point. Using the long-term annual appreciation rate of 4.886%—the 25-year compound average in the Austin market—it would take approximately 59 months (until May 2030) for the market to return to its prior peak of $551,608 if today’s median holds as the market bottom. This projection assumes no further economic shocks and a return to standard growth. However, should macroeconomic conditions remain tight, this timeline could extend, delaying equity recovery for homeowners who purchased during the 2021–2022 price run-up.

The Market Flow Score (MFS), a normalized measure of market momentum, is currently at 2.39. That’s far below the historical average of 6.59, reaffirming that homes are moving slower, sellers are negotiating more, and the pace of turnover is well below expectations for a balanced market.

Taken together, today’s data paints a picture of a market that is oversupplied, under-engaged, and in a state of price recalibration. Buyers, who were previously sidelined due to affordability, are beginning to gain the upper hand—but many remain cautious. Sellers, meanwhile, are entering the market in large numbers, possibly due to life-driven needs or fear of missing the next interest rate cycle. The tension between these forces will define the second half of 2025.

Scroll down to view the full Austin Daily Real Estate Briefing PDF for: July 29, 2025.