Austin Housing Market Report Mid-Year June 2023

Posted by Realty Austin on July 25th, 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.

We are halfway through the year, and the Austin housing market has seen some noteworthy changes. Looking toward the second half of the year, we'll delve into key market trends, the impact of factors like mortgage rates and affordability, and explore the future of the Central Texas real estate market.

Let's begin by examining the key highlights from June 2023:

• The number of homes for sale increased by 38% compared to the previous year, offering homebuyers more choices.

• Average days on the market decreased by 4 days from the previous month to 61 days, yet increased by 43 days from a year ago.

• New listings entering the market decreased by 23% compared to a year ago, but have risen by 55% since the start of the year.

• Homes under contract increased by 19% from the previous year, signaling steady buyer demand.

• While home sales declined by 8% compared to a year ago, they have experienced a remarkable 92% increase since the beginning of 2023.

• Monthly inventory levels reached 3.7 months compared to 2.1 months in June 2022.

• Median home sale prices decreased by 9% year over year to $483K. However, prices continued an upward monthly trajectory, growing consecutively for four months.

• Homes sold closer to their list price in June at 94%, compared to 90% in January, indicating a stronger negotiation position for sellers.

• Over 9,000 homes are for sale and over 5,000 homes have reduced their price in the past 30 days. 

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

Balancing Supply and Demand

“The rise in inventory indicates a more balanced and normalized market, following the rapid price growth and heightened sales activity experienced during the COVID-19 pandemic,” noted Jennifer Korba, Central Agent Success Manager at Realty Austin.

With the inventory of homes for sale reaching 3.7 months, the highest level since April 2017, compared to 2.1 months in June 2022, the market is moving towards equilibrium. This provides favorable conditions for sellers looking to list their homes during the peak summer buying season.

“If you’re needing to sell your home, now is a great time. The later in the summer you list, the more likely the property will need a little discount to make sure the house isn’t sitting on the market for too long once schools are back in session – or even later as we approach the holidays. To maximize profits, sellers should work with a trusted real estate advisor when listing their home for sale,” said Tom Thornton, Southwest Agent Success Manager at Realty Austin.

Factors Shaping the Market

Two key factors shaping the housing market are median sales prices and closed sales. Despite median home prices declining year-over-year, dropping from their peak in April and May 2022 at $550K, prices have still shown a significant 50% increase since 2019. This sales price growth indicates a resilient and rebounding market, with properties gaining value month over month.

Closed Sales in June may have lagged compared to the previous year, possibly due to the impact of current mortgage rate conditions on buyer purchasing power. The uptick in mortgage rates, as shown in Freddie Mac’s Primary Mortgage Market Survey, averaged 6.78% as of July 20, down from last week’s 6.96%. Though U.S. inflation hit a two-year low at 3%, economists believe rates could remain above 6.5% for a while longer.

“If mortgage rates stay below 6.5% or ease lower, we expect a surge in home buyer demand, leading to a reduction in available inventory. Home prices will have even more support than we’ve already seen in 2023. This will be important to pay attention to in the coming months, to see how market dynamics respond to rate changes,” said John Coake, Head of Sales at Realty Austin.

Leasing and Rental Environment

Renting has become a popular choice for some potential buyers due to affordability constraints and hesitations about entering the market. Dr. Clare Losey, Housing Economist at the Austin Board of REALTORS®, emphasizes the significance of homeownership as a means for households in the U.S. to build wealth. The Texas State Affordable Housing Corporation offers resources, including down payment assistance and fixed-rate mortgage loans, to support potential homebuyers.

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.

Texas Legislation and Affordability

Affordability remains a key concern statewide, leading to legislative efforts aimed at addressing the issue. The Texas Legislature raised the homestead exemption from $40,000 to $50,000, providing homeowners increased leverage and insulation against rising property taxes. 

“Waiting for lower mortgage rates or home prices may not be a viable strategy as access to affordable housing remains a challenge. Affordability should be a focal point, ensuring that housing suitable for all price points is developed in Austin,” said Amanda Dudley, North Agent Success Manager at Realty Austin.

Outlook for the Second Half of 2023

The Austin housing market is expected to remain relatively robust in the near term. Mortgage rates may decline slightly as the Federal Reserve adjusts monetary policy in response to decelerating inflation. This could provide higher purchasing power for potential buyers. While home price volatility typically occurs during the peak buying months, no significant swings are anticipated for the rest of the year. Inventory levels are likely to level out, still favoring a seller's market but becoming more balanced.

Whether you’re a buyer or seller, understanding the latest trends and market conditions empowers you to make informed decisions. Embark on your real estate journey and achieve your goals with the support of a local professional. Reach out at 512-241-1300 or email realtor@realtyaustin.com.

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