July median home prices fall in all five Central Texas counties

As the latest figures show, the real estate market in Central Texas continues to cool down.

The median home sales price fell last month in all five Austin-area counties compared to the same month last year, according to the Austin Board of Realtors’ monthly report for July released Wednesday.

According to experts, the lower closing prices are mainly due to higher mortgage interest rates, which have weakened the purchasing power of many buyers.

On a positive note for potential buyers, housing supply in Austin’s five-county region is increasing (the number of active listings increased 20.3% in July compared to July 2023), giving potential buyers more choice and negotiating leverage, industry experts and real estate agents say.

More: Housing supply in the Austin region rises sharply at mid-year, while sales and average prices fall

Although mortgage rates fell last week to their lowest level since May 2023, the overall sharp rise in interest rates over the past two and a half years has left some buyers unable to afford the home they once could afford, while others can no longer afford to buy at all.

In addition to higher prices, experts say demand for housing has also waned as fewer new residents have moved into the Austin area in recent months. This has led to a correction in the local market, which is returning to more normal levels after a period of unsustainable growth following the outbreak of the coronavirus pandemic in 2020, according to experts.

More: Positive outlook for Austin area housing market; experts say job growth and lower home prices are beneficial

“With interest rates around 6.5%, only about half of homeowners in our market can afford a median-priced home and only about a quarter of renters can afford an entry-level home,” said Clare Knapp, housing economist for the Austin Board of Realtors, in a press release.

“Persistently high mortgage rates continue to impact buyers’ purchasing power, but the increase in July sales in four of the five counties (in the Austin area) shows the strength of housing demand in Central Texas,” Knapp said.

More: Housing supply in the Austin region rises sharply at mid-year, while sales and average prices fall

In search of affordability

Travis was the only Central Texas county where home sales declined in July compared to the same period last year as buyers looked for cheaper homes in the Austin suburbs, city council officials and real estate agents said.

Although Austin continues to attract new residents, “we’re also noticing a trend of people moving to more affordable surrounding areas like Kyle and San Marcos, where they can still enjoy proximity to Austin’s amenities,” says Amy Alvarado, an Austin real estate agent with Kuper Sotheby’s International Realty.

Across the Austin-Round Rock region, which stretches from Georgetown to San Marcos, home sales fell 3.5 percent last month, with 2,652 homes changing hands.

Half of the homes in the region sold for more than $450,000, the other half for less, representing a 2.8 percent decline in the median closing price, the panel said.

Within Austin city limits, the median home sale price was higher, reaching $585,000 last month, up 1.7% from July 2023.

In Travis County, 1,155 homes were sold, down nearly 12% from last year. Within the Austin city limits, there were 880 sales, down 10.3% from July 2023.

In contrast, sales increased in Williamson, Hays, Bastrop and Caldwell counties as buyers continued to seek more affordable housing options, committee officials said.

“Home prices still need to come down across the market to reflect market conditions and appeal to buyers where their purchasing power currently lies,” Knapp said. “It’s notable that we’re seeing more first-time buyers ready to move this year compared to last year, and that’s a positive sign for our market.”

Kent Redding, the board’s president, said potential buyers are “taking advantage of the large supply of housing and more affordable housing options in the market outside of Travis County. This shows that buyers are willing to pounce when the price of a home is right.”

Alvarado said that “as the market corrects and prices stabilize, buyers are becoming more selective and making sure they find the right home at the right price rather than rushing into a purchase.”

Find out about the latest real estate sales, prices and what’s on offer in the Austin market

Some buyers leave the sidelines

When interest rates fell to their lowest level since May 2023 last week, “the drop attracted buyers who had been waiting for the drop,” said Brad Pauly, a real estate agent who owns Pauly Presley Realty in Austin.

“Although August is traditionally a quieter month and there are recession concerns, we have been able to reduce our inventory,” Pauly said. “If interest rates are below 6% by the end of the year, as some are predicting, we could have a strong housing market in 2025.”

“I’m still bullish on the Austin market, and now is a great opportunity to buy with prices well below their peaks,” Pauly said in an email. “What most buyers don’t realize is their opportunity to buy their interest rates down to a more comfortable monthly payment.”

Although the market has slowed due to rising interest rates, conditions are stabilizing and returning to more normal levels. Real estate agents say fair-market-priced homes are still selling quickly. The market shift, agents say, gives some buyers an advantage compared to the pandemic-era madness when bidding wars were commonplace.

“The Austin market has seen a shift from the intense sellers’ market of recent years to a more balanced market,” said Alvarado. “With increased inventory and longer selling times… ~~. . .~~ Buyers have more choices and are under less pressure to make quick decisions.”

Sellers, meanwhile, must “strategically plan pricing,” properly stage their homes and perform maintenance in a market that has changed after years of rapid appreciation, Alvarado said.

“Sellers may need to adjust their expectations and pricing strategies to remain competitive,” Alvarado said.

For some potential buyers, the slowdown is an opportunity to “enter the Austin market at more affordable prices, particularly in the $350,000 to $450,000 range, where most of the activity is currently occurring,” Alvarado said.

While that ideal price range applies mostly to suburbs outside of Austin, Alvarado noted that within the city limits, there are nearly 500 listings with three or more bedrooms for sale for under $450,000. That includes homes in the 78747, 78744, 78748, 78752, 78723, 78741, 78745, 78749 and 78758 zip codes, to name a few. “It’s a pretty big area,” Alvarado said.

Return to normality

A recent Newsweek article said Austin’s real estate market is “in acute distress as new construction continues to flood the market while sales in the Texas capital plummet.” The article cited a study by Parcl Labs, which provides real estate data and research.

Mark Sprague, a longtime real estate market analyst with Austin-based Independence Title, said there was “some truth” in the article but didn’t give it much weight beyond that.

Although the median and average value of homes sold have declined due to rising mortgage rates, “the truth is it’s been a stronger market than usual, with some slowdown now,” Sprague said. “The Austin market has returned to some normalcy.”

Homes are still selling “at small discounts” from asking price, Sprague said. Over the past five years, homes have sold “within 103 to 95 percent (today’s average) of list price,” he said. And the Austin area’s annual home price appreciation of 3.5 percent “is still above the historical average of the last 50 years.”

“If you bought in the last five years and sold today, you have a pretty good chance of making a profit,” Sprague said. “If you bought in the last three years and tried to sell today, commissions and closing costs would make it hard to make a profit. But barring a job change, selling an investment of any kind in the first five years is questionable in any market.”

“Has appreciation slowed? Yes. Has it stopped or has it reversed? It’s a challenge to prove that for a property in the Austin area,” Sprague said. Prices are coming down a bit, which is healthier for a market that has been “heating up,” he said.

More: Zillow shows falling real estate prices in Austin. That’s why local experts are optimistic.

“Big discounts? No,” Sprague said. “Other than the declining sales in Austin and the rising inventory over the last two months, Austin is where it should be.”

Breakdown by district (July year-on-year)

Travis:

Sales: 1,155, an increase of 11.9%

Average price: $525,000, up 1.9%

Williamson:

Sales: 943, up 3.8%

Median price: $428,500, down 0.3%

Hays:

Sales: 401, up 4.5%

Median price: $385,500, down 3.6%

Bastrop

Sales: 116, up 4.8%

Median price: $343,745, down 6.5%Caldwell

Sales: 36, an increase of 12.5%

Average price: $291,000, down 24%

Source: Austin Board of Realtors

In search of affordability

Some buyers leave the sidelines

Return to normality

Breakdown by district (July year-on-year)

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