Austin Housing Market Report - September 2023

The Austin housing market experienced a notable shift in September, with housing inventory reaching its highest level in over eight years at 4.0 months supply and the average time homes spent on the market increased to 65 days. Closed sales saw an 18% year-over-year decline, and the median sales price dropped by 4% to $452K. These changes are primarily attributed to rising mortgage rates, underscoring the importance of engaging with an experienced REALTOR® for successful transactions if you’re planning a move. While these shifts present challenges, several bright spots and opportunities are emerging. 

Let's start by taking a look at the key points from September 2023:

1) The number of homes for sale increased by 7% compared to the previous year, with a 2% increase from last month. 

2) The average days a home stays on the market increased by 5 days from the previous month, now at 65 days, and is 24 days longer than a year ago.

3) The number of new listings entering the market went down by 7% compared to the previous year and decreased by 10% from last month.

4) Buyer demand waned from last month falling 13%, however, compared to last year, 7% more homes went under contract.

5) Home sales decreased by 18% compared to the previous year and decreased by 18% from the previous month.

6) Housing supply reached 4.0 months of inventory, the highest level in more than eight years. This time last year, housing inventory was at 3.1 months.

7) The median home sale price decreased by 4% compared to the previous year, now at $452K. 

8) Right now, there are over 10,000 homes for sale, and more than 5,000 homes have lowered their price in the last month.

Creative Solutions for Homebuyers

Amid concerns about high mortgage rates and affordability, buyers are getting creative. Some are exploring unconventional options, such as co-buying properties or financial assistance solutions to help overcome affordability challenges. The Texas State Affordable Housing Corporation (TSAHC) provides fixed-rate mortgage loans, down payment assistance, and mortgage interest tax credits for homebuyers through their programs. Another program to help buyers achieve their goal of owning a home is Home Possible® from Freddie Mac. This affordable lending program allows down payments starting at 3% and more credit flexibilities. 

September Demand for Homes

In September, homes going under contract witnessed a 7% year-over-year increase in buyer demand, signaling that buyers are actively engaged in the market. However, there was a 13% monthly decrease in pending listings from August to September, which is a normal seasonal cooling trend expected to continue through the year-end.

Housing Supply Keeps Prices Steady

Despite the Austin housing supply reaching 4.0 months of inventory, demand in our area continues to limit supply, consequently maintaining home prices at a stable level. This should reassure potential sellers that they are in a reasonable position.

Positive Home Price Growth Predicted

Despite concerns about rising mortgage rates, experts generally project positive home appreciation. Most forecasts indicate growth, alleviating concerns of a market downturn. This should provide confidence to potential buyers and sellers as they navigate this market. Home prices in Austin have stabilized after the last two years of post-pandemic frenzy. The median sales price in Austin moderated to $452,000, only a 4% year-over-year decrease.

Price Reductions by Sellers

Some sellers are accelerating price reductions to entice buyers, potentially offering opportunities for homebuyers. Partnering with an experienced real estate agent can help guide buyers on how to navigate such scenarios to their advantage.

John Coake, Head of Sales at Realty Austin, notes, "In Austin, we continue to see a month-over-month increase in the number of homes that are reducing prices. The industry norm for price reductions is typically around 35%. Austin was up this month with a 90-day average coming in close to 58%. Sellers are recognizing that pricing matters in this market, and buyers are eager to see price normalization in this higher mortgage rate environment."

Austin's Business Growth and Job Creation

Recent data from the U.S. Census Bureau's Business Dynamics Statistics program reveals that Austin's business startup density stands at 144% of the national rate, ranking seventh among the nation's 50 largest metropolitan areas and third among major metros for startup job generation. Austin remains a thriving hub for entrepreneurship, displaying consistent growth and providing a robust environment for startups.

Amanda Dudley, North Agent Success Manager at Realty Austin, highlights, "Austin’s business startup and job generation hold significant importance for those interested in buying or selling homes in the area. This economic vitality not only indicates a thriving local economy but also drives higher demand for housing. As Austin's startup landscape continues to expand, more individuals will flock to the city, intensifying competition in the real estate market."

Conclusion:

Despite challenges in the housing market, positive indicators and opportunities exist for both buyers and sellers. Real estate agents play a crucial role in helping clients navigate this evolving landscape and make informed decisions tailored to their individual circumstances and goals. Let's begin your real estate journey and achieve your goals with the assistance of my team. You can get in touch by calling me at 512.788.2629 or by emailing me: [email protected].