The Shift Is Real: Austin’s Market Narrative Goes Mainstream

The July 14th 2025 Monday Touch Point provided a data-rich update on the evolving conditions of the Austin real estate market. Trends that had been evident in local market metrics for months are now being acknowledged in national reporting, confirming a broader shift in the real estate cycle. The discussion focused on measurable indicators—such as inventory growth, absorption rates, and pricing pressure—highlighting a market that continues to decelerate amid weakening demand and rising seller urgency. 

Austin’s Correction: Now a National Narrative

The idea that “everything’s fine” has officially left the room. From FHA delinquencies to negative equity loans, the cracks that local insiders have observed are now reaching mainstream media. A staggering 18.2% of loans from 2022 are in negative equity, with 65% of FHA loans underwater. In Austin alone, that translates to over 6,000 homes underwater.

Redfin’s latest data highlights Austin as the #1 metro area where post-pandemic buyers are most likely to sell at a loss. Pre-pandemic buyers? Still mostly fine. But the risk for recent buyers is climbing—and national attention is now catching up.

Price Drops, Seller Psychology, and a Sidelined Buyer Pool
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One of the most shocking stats from this week’s update: 96% of price movement last week was downward. That’s the highest percentage of price reductions on record. Sellers continue to resist market realities, expecting a return to peak values. But buyer behavior tells another story. Inventory keeps rising while buyer urgency fades. The result? A historically low new listing-to-pending ratio of 0.52—back to levels not seen since 2008–2010.

Sellers are starting to ask, “What more can we do?” as price cuts and open houses fail to trigger offers. Meanwhile, buyers, sensing opportunity but also future discounts, are increasingly adopting a wait-and-see posture, reinforced by rising months of inventory and CPI-driven rate expectations.

Nominal vs. Inflation-Adjusted Values: A 25-Year Perspective
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Dan walked through updated inflation-adjusted price charts comparing Austin to the national market since 2000. In nominal terms, Austin is up 237% since 2000. But adjusted for inflation, appreciation falls to 77%, only slightly above the national average of 72.35%.

This chart makes one thing clear: much of the “gain” since the pandemic is now gone. Without the historic fiscal and monetary stimulus, we likely wouldn’t have seen the 2021–2022 price surge, and the current correction would be far less painful.

Inventory and Absorption: Tracking the Real Pressure
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New listings over the past 7 days rose to 1,097, rebounding from the July 4th week and flood disruptions. However, pendings failed to keep pace, holding at just 228. That yields a weekly ratio of 0.44 and a monthly ratio of 0.52—where for every 100 new listings, only 52 are being absorbed. Add in expireds, withdrawals, and homes back on market, and less than half of homes are actually selling.

Key inventory stats:

Active listings: 17,930 (just 146 below the record)

Price drops on active listings: 57.7%

Months of inventory: 6.39

Withdrawn listings: 492

Expireds: 165

Open houses: up nearly 10% from the prior week

Psychology Shift: The Fear of Waiting

In 2021–2022, buyers rushed in with FOMO. In 2025, we’re seeing the inverse: deflationary psychology. Buyers believe they’ll get a better deal if they wait. Some are already expecting another $30,000–$50,000 price drop and a lower rate environment by mid-2026. That belief, whether accurate or not, suppresses demand—and that mindset shift can become self-fulfilling.

A Call to Agents: Use the Data, Lead with Facts
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For agents, this market requires intentionality and tools. Dan emphasized the importance of using the daily briefing, activity index, and zip code-level data to communicate clearly with clients—especially sellers who need help adjusting expectations.

Zip code deep dives, like 78728, reveal that even if the average days on market looks healthy, sub-segments like 400–425K listings with 1,800–1,850 sq ft are stuck at nearly 200 DOM. That’s not just slow—it’s stalled.

Economic Outlook: CPI in the Driver’s Seat
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This week is crucial for interest rates. Tuesday’s CPI and Wednesday’s PPI releases could send rates soaring if inflation surprises to the upside. If CPI comes in hotter than the 3.0% forecast, expect 7.25–7.5% mortgage rates. If it comes in soft, the bond market may finally catch a break.