Forecast for Austin-area housing market ‘very tricky,’ expert says

Shonda Novak

Austin American-Statesman USA TODAY NETWORK

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The housing market has seen better days.

Buyers, sellers, investors — all have been affected by the shifting market, locally, nationally and globally.

In the current cycle, rising mortgage interest rates hit the real estate market in 2022, which continue to cut into many buyers’ purchasing power.

Now, with a new U.S. presidential administration, tariffs, economic uncertainty, stock market volatility, shaken consumer confidence and geopolitical turmoil are having ripple effects in the housing market.

“There’s so much uncertainty right now regarding the impact tariffs will have on the local economy and our housing market, which makes any forecast of what conditions will be like over the next three to six months very tricky,” said Eldon Rude, a longtime housing market analyst in the Austin region. “That said, financial confidence over the ability to repay a mortgage is critical to the health of the housing market, and that confidence is being tested in the current environment.”

Eric Bramlett, a real estate broker in Austin, said the uncertainty around tariffs set off the latest housing market woes.

“The tariffs have affected the bond market, which directly impacts mortgages,” said Bramlett, owner of Bramlett Residential. “They’ve caused turbulence in the stock market, which causes consumer confidence to go down. So, it’s a combo of fluctuating mortgage rates and bad consumer confidence affecting our local real estate market in the wrong direction.”

March stats

The latest figures from the Austin Board of Realtors reflect the softer housing market locally.

Across the Austin-Round Rock-San Marcos region, home sales fell in the first quarter as mortgage rates remain

elevated. The five-county region extends from Georgetown to San Marcos.

The 6,698 homes that changed hands in the region represent a 9.1% drop compared with the first quarter of 2024.

Half of the homes that sold in the first three months of this year went for more than $429,869 and half for less, for a 2.3% decline in the median closing price.

Housing inventory ticked up to a supply of 5.3 months, moving the region closer into balanced housing market conditions, the realty board said.

Although the numbers for what constitutes a “balanced” market vary somewhat by source, a 6- to 6 1/ 2-- month supply (meaning the time it would take to deplete the supply of available listings at the current sales pace) generally is considered a market in balance, with neither buyers nor sellers having the upper hand.

Affordability issues and growing economic headwinds are among the main factors shaping housing market activity in the first quarter, said Clare Knapp, housing economist for the Austin Board of Realtors.

“We started the year with a continuation of similar trends that shaped the market in 2024,” Knapp said in a statement. “However, stubbornly high mortgage rates and a weaker local labor market weighed on buyer confidence, while many sellers remained reluctant to adjust pricing expectations. That squeeze on buyer power shaped much of the activity we saw in the first quarter, reinforcing the need for greater flexibility and balance on both sides of the transaction.”

In the Austin region, the first-quarter numbers were “strongly impacted” by sales in March, the board said.

In March, home sales dropped 9.3% in the Austin region compared with March 2024. The median sales price was $446,000, basically flat (down 0.9%) from March a year ago.

“This continues the theme of pricing stability we’ve seen and reinforces that the market is not experiencing any meaningful swings up or down,” Bramlett said.

Across the region, pending sales (those in the pipeline to close) were up 3.1%, likely signaling an increase when April sales come out.

In March, the number of homes available for sale in the Austin area jumped nearly 19% from March 2024. The increase in active listings gives prospective buyers more choice and negotiating power, Knapp said.

House hunters now have time to “slow down, weigh their options and make more thoughtful decisions,” said Brandy Wuensch, president of the Austin Board of Realtors.

Within Austin’s city limits, active listings soared 23.7%, with 4,363 homes for sale.

Home sales in the city limits fell about 9% year-over-year, with 857 closings. Half of those homes sold for $590,750 and half sold for less, for a 5.5% increase in the median closing price.

Tariffs usher in uncertainty

“While early this year expectations of a strong rebound in the Austin housing market were to an extent muted considering mortgage rates remained high and the region was producing fewer jobs, the year started out somewhat normal,” said Rude, principal of the Austin-based consulting firm 360° Real Estate Analytics.

“However, as the likelihood of tariffs being imposed increased during March, uncertainty began to set in for both homebuyers and sellers,” Rude said, pointing to the decline in consumer confidence as evidence of the change in sentiment.

As measured by the Conference Board, consumer confidence fell sharply from 98.3 in February to 92.9 in March, Rude said.

While home listings always increase during the spring and summer months, Rude said, “listings are now well above the number of we saw in the spring of 2024. With listing totals likely to increase in the summer months, and the current level of uncertainty over the direction of the U.S. and local economy, I anticipate sellers in some parts of the Austin area will have to be increasingly aggressive on pricing to sell their homes.”

‘Strong signs of life’

With fewer home sales recorded in March compared with March 2024, “the media will likely focus on a noticeable decline in sold units,” Bramlett said.

However, “the deeper market story is much more balanced,” Bramlett said.

January and February were sluggish in terms of pending sales, so the drop in March’s sold units was expected, he said.

“Fortunately, March saw a solid rebound in pending units on a monthover- month basis. Pending contracts were nearly even with March 2024, which is a strong leading indicator for healthier sold numbers in April and May,” Bramlett said. “Pending activity shows strong signs of life.”

Still, recent global and economic uncertainty might weigh on buyer confidence, Bramlett said.

“The March pending units were very promising and were a reaction to interest rates falling into the high 6% range,” Bramlett said. “Unfortunately, rates have reversed course, so it’s likely that we’ll see demand pull back as a result. The economic uncertainty has caused instability in the stock market, which is directly affecting consumer confidence, which is another headwind the Austin market is facing.”

If you’re a buyer

“The spring season typically brings more competition, but it also brings more inventory — and we’re seeing that play out again this year,’ Bramlett said. “The good news for buyers is that prices remain stable, and there’s more to choose from. If interest rates hold steady or begin to decline later in the year, today’s purchases could look like a smart move in retrospect.”

If you’re a seller

“There’s a clear trend of increasing inventory, which means pricing and preparation are more important than ever,” Bramlett said. “You can absolutely sell successfully in this market, but sellers need to be strategic. Properties that are well-prepared and correctly priced are moving, while others are sitting. It’s important to be aware of your competition and market conditions.”