Austin’s housing market is entering 2026 with clearer price signals, slower demand, and a market structure that increasingly favors patience and negotiation.
Scroll down to view the full Austin Daily Real Estate Briefing PDF for January 02, 2026.
The Austin real estate market begins January 2026 with conditions that look very different from the peak years of 2021 and 2022, and even different from early 2025. Inventory is lower than last summer’s extreme highs, but demand has softened faster than supply. That combination is reshaping pricing power, negotiation leverage, and expectations across the market. For buyers, sellers, investors, and real estate agents, this austin market update confirms that Austin is no longer in a recovery sprint. It is in a recalibration phase where pricing realism and timing matter more than speed.
Active residential listings currently stand at 12,479, which is down 5,667 homes from the June 2025 peak of 18,146 but still 13.7 percent higher than this time last year. More than half of all active listings, specifically 55.1 percent, have already had at least one price reduction. That number alone tells an important story about market psychology. Sellers are adjusting, but often only after initial resistance. This is not a market where prices rise simply because a home comes to market. Buyers are forcing price discovery.
The composition of inventory also matters. Of the 12,479 active listings, 3,917 are new construction and 8,562 are resale homes. Builders continue to represent a large share of supply, and they tend to compete using incentives rather than headline price cuts. Resale sellers, on the other hand, feel pricing pressure more directly, which explains why price reductions remain elevated across most submarkets. Compared to the Austin housing boom years, today’s sellers must compete harder for attention.
New supply has not slowed. Cumulative new listings from January through December totaled 49,912, which is up 5.0 percent year over year and 22.5 percent above the long term average. That means homeowners continue to list, even as demand cools. When listing activity stays elevated while buyer demand weakens, inventory pressure builds. This is one of the most important dynamics shaping the current austin housing forecast.
Pending listings reveal the other side of the equation. Active listings rose year over year, but pending listings fell. There are currently 3,033 pending homes compared to 3,281 at the same time last year, a decline of 7.6 percent. New construction accounts for 1,243 of those pendings, while resale homes account for 1,790. Even with strong population growth and job creation over the past decade, buyer urgency has slowed materially.
This slowdown is clearly reflected in the Activity Index, one of the most reliable measures of market momentum. The overall Activity Index declined from 23.0 percent last year to 19.6 percent today, a drop of 15.1 percent. New construction remains more active at 24.09 percent, while resale homes sit at just 17.29 percent. That difference explains why builders continue to close deals while individual sellers struggle more.
When we break resale activity into market phases, the picture becomes even clearer. A large share of resale markets now fall into contraction or even crisis zones, where Activity Index readings drop below 20 percent. These are conditions associated with market stalls, supply imbalances, and downward price pressure. This does not mean every neighborhood is collapsing, but it does mean pricing power is uneven and increasingly location dependent.
The new listing to pending ratio reinforces this narrative. In December 2025, the monthly ratio was 0.89, meaning fewer homes went pending than were listed. For the full year, the ratio averaged 0.74, well below the 25 year average of 0.82. Over the course of 2025, new listings exceeded pending contracts by 6,256 homes. That excess supply does not disappear overnight. It accumulates and weighs on pricing into 2026.
Months of inventory provides another critical lens. Overall months of inventory increased from 3.85 last year to 4.44 today, a 15.4 percent jump. While this is not extreme by historical standards, it represents a meaningful shift from a seller driven environment toward a more balanced or buyer leaning market. On the resale side specifically, many areas now sit in the neutral zone or buyer advantage range, where pricing stabilizes or softens rather than rises.
City level data reinforces this shift. Austin’s months of inventory declined year over year to 3.90, but that drop reflects fewer listings rather than stronger demand. Two year comparisons show inventory is still nearly 9 percent lower than January 2024, suggesting supply normalization is happening unevenly across the region. This unevenness is why broad headlines often miss what is happening at the neighborhood level.
Sales activity confirms that demand has not collapsed, but it has cooled. There were 2,420 homes sold in December 2025, and total sales for the year reached 30,238. That figure is down 3.7 percent year over year but still 7.6 percent above the long term average. The market is moving, just not fast enough to absorb elevated inventory without price concessions.
When sales are normalized by population, the slowdown is more apparent. Austin recorded 1,180 sales per 100,000 residents in 2025, which is down 6.0 percent year over year and more than 20 percent below average. Sales per 1,000 Realtors tell a similar story, sitting nearly 23 percent below historical norms. For agents, this explains why competition feels intense even though transaction volume remains decent by long term standards.
Prices continue to adjust downward from peak levels. The average sold price in December was $574,047, down nearly $108,000 from the May 2022 peak. The median sold price was $432,450, which represents a 21.37 percent decline from the $550,000 peak. These are not small corrections. They reflect a full market reset rather than a temporary pause.
Comparing current median prices to levels from 36 months ago shows values are still nearly 4 percent lower. That matters for investors evaluating hold periods and return assumptions. Long term appreciation in Austin has averaged 4.624 percent annually over 25 years. At that rate, returning from today’s median price back to the prior peak would take roughly 65 months, placing recovery around April 2031. That timeline frames the austin real estate forecast in realistic terms rather than optimistic headlines.
Price behavior also varies by price tier. Over the past year, homes in the bottom 25th percentile saw prices fall by 3.64 percent, while the top 25th percentile actually posted a slight 0.76 percent increase. This divergence shows that higher end buyers remain selective but active, while affordability pressure continues to weigh on entry level segments. City level data further confirms this, with only seven cities posting year over year median price gains and twenty three recording declines.
Despite slower demand, the market is not frozen. The absorption rate in December was 21.69 percent, well below the historical average of 31.60 percent but far above crisis levels. Buyers are active, just cautious. They are negotiating, requesting concessions, and walking away when pricing does not align with market reality.
One metric that highlights this balance is the Market Flow Score, which came in at 8.35 for December. This is above the historical average of 6.59, suggesting that while demand is slower, inventory is still moving efficiently relative to supply. The market is not jammed, but it is selective.
For buyers, this environment offers leverage that did not exist during the boom years. Price reductions are common, inventory is available, and urgency is lower. For sellers, success now depends on pricing correctly from the start, understanding local demand conditions, and being flexible. Overpricing remains the fastest way to stall a listing.
For investors, the data points to patience. Rental demand remains solid, but acquisition prices are still adjusting. Long term appreciation remains intact, but short term gains are unlikely without value add strategies. For agents, the message is clear. This is a skills market, not a momentum market. Education, pricing strategy, and negotiation expertise matter more than ever.
Austin real estate in early 2026 is neither booming nor busting. It is normalizing after an extraordinary cycle. This austin housing forecast suggests continued price discovery, slower absorption, and gradual stabilization rather than a rapid rebound. Those who adapt to this reality will outperform those waiting for the past to return.
