Austin Market Report - August 2024

[David Ivy]

The August 2024 report from the Austin Board of REALTORS® shows housing prices in Austin and the greater metro have been fairly stable over the past 12 months. However, now that we’re heading into fall, we can see that 2024’s summer selling season was slower than 2023, with closed sales in Austin down around 16% compared to last year. Inventory has held around 5-6 months for most of 2024 so far, with roughly 15% more active listings on the market in the metro area compared to August 2023. So, while prices currently remain similar to last year, we are seeing softer buyer demand and increased inventory compared to 2023.

Here are the full stats for Austin and the greater metro:

Here’s a chart showing the median sales price of a single-family home in the City of Austin this year through August:

The median sales price for a single-family home in August 2024 was up roughly 11% from the beginning of the year. However, we can see that the increase in listing inventory may have caused prices to soften as the summer progressed. Compared to the recent pricing peak in May 2022, single-family home prices in Austin are down approximately 15%.

For some broader context, here’s a chart of the median sales price of a single-family home in Austin over the past 10 years:

As you can see, pricing in Austin is still substantially above pre-pandemic levels. In fact, the median sales price of a single-family home in the Austin metro is ~52% higher than it was at the start of 2020. For the 10 year period spanning August 2014-2024, single-family prices in Austin nearly doubled, yielding an annualized appreciation rate of ~9.5%.

With inflation nearing its 2% target and signs of a slowing labor market, The Federal Reserve is predicted to cut rates as many as three times before the end of 2024 (see here). Anticipation of these cuts has already reduced mortgage rates to their lowest in nearly 20 months. A 30-year fixed rate mortgage is currently sits around 6.15% interest:

All else being equal, lower mortgage rates reduce the cost of ownership and, thereby, allow more people to afford to buy. For example, a buyer putting 20% down on a $500k home would pay around $500k in interest over the life of a typical mortgage at current rate around 6.5%. With an 8% mortgage rate, they would pay more than $650k in interest. However, as this WSJ article points out, falling interest rates won’t solve all the problems faced by many buyers in current market conditions.

What if I’m a buyer? In many ways, this is the best market for buyers in Austin in years. There are more listings to choose from now than any other time in nearly a decade. Listings are selling for roughly 93% of their list price on average. Multiple offers are now the rare exception, not the norm. Buyers have significantly more negotiating power. They can take time with their search and be more selective about a property’s location and condition. So, if interest rates are a buyer’s primary roadblock, then I recommend negotiating a rate buydown at a seller’s expense or looking at new construction, where builders are offering rate reductions and other substantial incentives. Mortgage rates might end 2024 below 6%. So, it could be a good time to start looking while inventory remains high.

What if I’m a seller? Know that there is still strong demand for Austin housing and that prices are still considerably higher than just a few years ago. However, it’s important to price competitively and be prepared for buyers to request concessions. Days on market are around 70 days on average, depending on the area. Many listings are adjusting their asking price at least once while on the market. But properties priced and marketed appropriately can still go under contract in a matter of days, sometimes with multiple offers. Now is not the time to “test the market” with an ambitious price to “see what happens.” With the increased competition among sellers, it’s crucial to prepare a listing to stand out among the rest and work to address likely buyer objections prior to going on market.