Austin Housing Market Report August 2023

In the ever-evolving Austin housing market, staying up-to-date with the latest trends and market conditions is crucial for both buyers and sellers. By partnering with experienced agents and understanding the data, you can make informed decisions for your future.

 

The real estate market in Austin is showing new signs of buyer confidence with a 1.4% increase in closed sales, the largest increase since February of 2022 according to the Austin Board of REALTORS® (ABoR) August 2023 Central Texas Housing Market Report. The region also witnessed an 8.8% month-over-month increase in closed sales, indicating robust buyer optimism. Housing inventory is gradually improving, with a year-over-year increase of 1 month and a slight month-over-month increase of 0.1 months, now at 3.8 months of supply. This shift in the market allows potential homebuyers, especially first-timers, to be more selective in their choices as housing inventory increases across Central Texas. 

 

Let's look at the key points from August 2023:

• The number of homes for sale increased by 12% compared to the previous year, with a 3% increase from last month. 

• The average days a home stays on the market increased by 1 day from the previous month, now at 60 days, and is 28 days longer than a year ago.

• The number of new listings entering the market went up by less than 1% compared to the previous year and increased by 5% from last month, giving home buyers more options to choose from.

• Buyer demand was strong in August, with 2% more homes under contract compared to last year and 7% more homes under contract compared to last month, a surprising turn from seasonal forecast predictions.

• Home sales increased by 1.4% compared to the previous year and increased by 4% from the previous month.

• Housing supply in August strengthened moderately from the previous month, now at 3.8 months, compared to  2.9 months a year ago. 

• The median home sale price decreased by 7% compared to the previous year, now at $460K. This is a less than 1% decrease from the last month, which indicates home prices have stabilized. 

• Right now, there are over 9,000 homes for sale, and more than 5,000 homes have lowered their price in the last month.

Source: Austin Board of REALTORS®, Austin-Round Rock Metropolitan Statistical Area. 

Understanding the Austin Real Estate Market Shift

The burning question on the minds of real estate professionals and consumers alike for the past 18 months: In which direction is the real estate market headed?  

 

“Moving forward, any predictions about our current housing market become particularly difficult in light of all the moving factors at play. With the Federal Reserve expected to increase interest rates in either November or December of this year, this could induce upward pressure on mortgage rates, which would mean less buying power for buyers this fall,” said Dr. Clare Losey, Housing Economist at ABoR.

 

Affordability & Housing Supply

Despite the improvement in housing inventory, there remains a limited supply, particularly in affordable housing options, according to ABoR. The region's high development fees have been identified as a significant barrier to new home construction, driving up costs and further restricting the supply of affordable homes for sale. 

 

“With expected changes in mortgage rates before the year's end, both buyers and sellers are advised to stay informed about the market's evolving factors to make informed decisions. It's crucial to consult with an agent for guidance, as the Austin market demonstrates activity and resilience with increased inventory and lower median home prices," said Amanda Dudley, North Agent Success Manager at Realty Austin.

 

Pro Tip: If you’re a potential first-time home buyer, explore our guides on qualifying for a home loan, essential questions to ask, overcoming down payment myths, and affordability resources to get started.

 

Demand Shift Towards New Construction

Higher mortgage rates, population growth, and not enough homes available in the price range that people can afford have led to a surge in demand for new construction. According to the Texas A&M University Real Estate Research Center, more than 20% of people buying homes are choosing new construction and this number is expected to climb to over 30% in the next two years. 

Revisions in Expert Home Price Predictions for 2023

Last year, there were many headlines that foretold a significant home price plunge in 2023, reigniting worries of a housing crash akin to the one in 2008. However, reality painted a different picture. While there was a correction following the remarkable price surge in 2021 and 2022, home prices didn't fall as much as everyone feared. 

 

In Austin, for instance, home prices reached their lowest point in April of this year, experiencing a year-over-year drop of 15%. Yet, median home sale prices have demonstrated remarkable resilience with a steady moderation in price deceleration since spring. In June, median home prices showed a 9% year-over-year decrease and August indicated further improvements with a 7% year-over-year decrease slowing the gap in home price deceleration.

“Looking ahead, it's important to recognize that seasonal fluctuations will influence home price appreciation in the coming months, with prices likely to slow as the housing market seasonally cools toward year-end. However, this slowdown shouldn't be confused with a price decline; it's merely a deceleration of appreciation,” said Tom Thornton, Southwest Agent Success Manager at Realty Austin.

 

Homeowners are enjoying significant equity growth. In Austin, residents have witnessed a remarkable 40% increase in equity since August 2019. Experts now predict home prices to remain stable or even show positive growth by year-end and will continue to go up every year through 2027, according to the latest Home Price Expectation Survey, increasing equity for current homeowners even more. 

“Texas homes typically appreciate 5% annually, so if you’re planning to buy or sell a home, one thing to consider is what home prices will do in the future and how that might impact your investment. It’s important to remember home price appreciation is cumulative. Owning a home is an investment that builds household wealth over time,” said  Jennifer Korba, Central Agent Success Manager at Realty Austin.

 

Evolving Market Dynamics

The current imbalance between supply and demand has affected home prices, which are still rebounding but at a slower pace in 2023. More inventory is needed to reach a balanced market, and with the 'locked-in effect' of lower mortgage rates, sellers are holding back, preventing a needed increase in supply. 

 

Pro Tip: Explore different mortgage strategies including rate buydowns to achieve your real estate goals. 

 

“The good news is that the feared ‘housing bubble’ has not burst, as many worried it might. Instead, the market has found a delicate balance between supply and demand, resulting in a comeback in median home sales prices in Austin. However, this increase is partly due to current homeowners' reluctance to sell, as they hold onto their lower-interest rate mortgages,” said John Coake, Head of Sales at Realty Austin.

 

To navigate the market accurately, it's wise to connect with a trusted real estate agent who can provide reliable data and help you separate fact from fiction. Whether you're buying or selling, having a good grasp of the latest trends and market conditions empowers you to make well-informed choices. Begin your real estate journey and achieve your goals with the assistance of a local professional. You can get in touch by calling 512-241-1300 or emailing realtor@realtyaustin.com. 

 

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