Median home-sales prices decline in all five Central Texas counties in July, report says

The Central Texas housing market remains on its cooling streak, the latest figures show.

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

Experts have said the lower closing prices are due mainly to higher mortgage interest rates that have chipped away at many buyers' purchasing power.

On the upside for prospective buyers, the supply of housing in the five-county Austin region is climbing (active listings were up 20.3% in July over July 2023), giving prospective buyers more choice and leverage in negotiations, industry experts and real estate agents say.

More: Housing supply surges in Austin region at midyear as sales, median price tumble

Though mortgage rates declined last week to their lowest level since May 2023, sharply higher rates overall for the past 2½ years have meant some buyers aren't able to afford the home they once could afford, while others no longer can afford to buy at all.

Along with higher rates, demand for housing also has eased due to a slowing influx of new residents moving into the Austin area in recent months, experts have said. That has led to a correction in the local market, which experts say is returning to more normal levels following a period of unsustainable growth after the coronavirus pandemic hit in 2020.

More: Austin-area housing outlook positive; job growth, slower home prices pluses, expert says

“With 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 a starter home," Clare Knapp, housing economist for the Austin Board of Realtors, said in a news release.

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

More: Housing supply surges in Austin region at midyear as sales, median price tumble

In search of affordability

Travis was the only Central Texas county in which home sales declined in July year-over-year, as buyers sought out more affordably priced houses in Austin's suburbs, board officials and real estate agents said.

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

Across the Austin-Round Rock region stretching from Georgetown to San Marcos, home sales declined 3.5% last month, with 2,652 houses changing hands.

Half of the homes in the region sold for more than $450,000 and half sold for less, for a 2.8% decline in the median closing price, the board said.

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

Travis County had 1,155 home sales, down nearly 12% year-over-year. Within Austin's city limits, there were 880 sales, a 10.3% decline from July 2023.

In contrast, sales rose in Williamson, Hays, Bastrop and Caldwell counties as buyers continue to seek more affordable housing options, board officials said.

"Home prices across the market still need to decrease to meet market conditions and meet buyers where their purchasing power is currently," Knapp said. "It is notable that we are seeing more first-time buyers willing to make a move this year compared to last, and that is a positive sign for our market.”

Kent Redding, the board's president, said prospective buyers "are taking advantage of ample housing inventory and more affordably priced housing options in the market outside of Travis County. This demonstrates that when a home is priced right, buyers are ready to make a move."

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

Check out what's up — and down — with home sales, prices, supply in Austin area market

Some buyers exiting the sidelines

With interest rates sliding last week to their lowest level since May 2023, the decline "brought out buyers who were waiting for the dip," said Brad Pauly, a real estate broker who owns Pauly Presley Realty in Austin.

"Even Though August is a traditionally slower month and there are recession concerns, we did have a reduction of inventory," Pauly said. "If rates are under 6% by the end of the year as some are predicting, we may have a strong 2025 real estate market."

"I'm still bullish on the Austin market and now is a great opportunity to buy with prices being well off of their highs," Pauly said in an email. "What most buyers fail to realize is their ability to 'buy down' their interest rates to a more comfortable monthly payment."

Although the market has slowed down as rates have risen, conditions are stabilizing and returning to a more normal level, with homes priced in line with the market still selling quickly, real estate agents say. The shift in the market, agents say, is giving some buyers advantages, compared with the pandemic-era frenzy when bidding wars were the order of the day.

"The Austin market has experienced a shift from the intense seller’s market of recent years toward a more balanced market," Alvarado said. "With increased inventory and longer selling times ... . . . buyers have more options to choose from and are less pressured to make quick decisions."

Sellers, meanwhile, "need to be strategic about pricing," stage their homes properly and fix maintenance items in a market that has shifted after years of rapid appreciation, Alvarado said.

"Sellers may need to adjust their expectations and pricing strategies to stay competitive," Alvarado said.

For some prospective buyers, the slowdown is a chance to "enter the Austin market at more favorable price points, particularly in the $350,000 to $450,000 range, which is seeing the most activity," Alvarado said.

While that sweet spot for prices mainly applies to suburban areas outside of Austin, Alvarado noted that, inside the city limits, there are almost 500 listings with three or more bedrooms that are for sale for less than $450,000. They include homes in the zip codes of 78747, 78744, 78748, 78752, 78723, 78741, 78745, 78749 and 78758, to name a few. "It's a pretty broad area," Alvarado said.

Returning to normalcy

A recent Newsweek article said Austin's housing market is in "acute distress as newly built homes continue flooding the market at the same time as sales plummet in the Texas capital." The article cited a study by Parcl Labs, which provides housing market data and research.

Mark Sprague, a longtime Austin-based housing market analyst with Independence Title, said there's "a bit of truth" in the article, but didn't give it much weight beyond that.

Although the median and average values of sold homes have slowed due to mortgage rates increasing payments, "the truth is it has been a stronger-than-normal market, with some slowing presently," Sprague said. "The Austin market has returned to some normalcy."

Homes are still selling "with little discounting" from their asking prices, Sprague said. During the last five years, homes have sold "within 103% to 95% (today’s average) of list price," he said. And the Austin area's annual home-price appreciation of 3.5% "is still above historical averages 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 tough to profit. But other than job relocation, selling an investment of any type in the first five years is questionable in any market."

"Has appreciation slowed? Yes. Has it stopped or reversed? It’s a challenge to show that on any property in the Austin area," Sprague said. Prices are coming down some, which is healthier for a market that had been "supercharged," he said.

More: Zillow shows crashing home prices in Austin. Here's why local experts are optimistic.

"Huge discounts? No," Sprague said. "Other than Austin sales slowing and inventory rising in the last two months, Austin is where it should be."

Breakdown by county (July year-over-year)

Travis :

Sales: 1,155, up 11.9%

Median 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, up 12.5%

Median price: $291,000, down 24%

Source: Austin Board of Realtors

This article originally appeared on Austin American-Statesman: Median home-sales prices decline in all five Central Texas counties in July, report says