The Austin real estate market enters early 2026 with clear signals that the post-pandemic reset is still underway. Active residential listings currently stand at 12,492, up 13.8 percent from the same time last year. While this is well below the prior inventory peak of 18,146 reached in late June 2025, it remains historically elevated for this point in the cycle. For buyers, this continues to mean more options and negotiating leverage. For sellers, it reinforces the importance of pricing accuracy and realistic expectations in a market that no longer rewards optimism alone.
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Price reductions remain widespread across the market. Today, 54.6 percent of all active listings have had at least one price drop. This level of price adjustment confirms that many sellers are still chasing yesterday’s pricing rather than aligning with today’s demand. In practical terms, this creates opportunity for buyers who are patient and disciplined, while increasing risk for sellers who delay meaningful price corrections. In past balanced markets, price drop rates closer to 30 to 35 percent were typical. Today’s number signals continued downward pressure rather than stabilization.
Breaking down inventory further, new construction accounts for 3,899 active listings, while resale homes total 8,593. This split matters because new construction continues to compete aggressively with resale properties through incentives, rate buy-downs, and closing cost assistance. Resale sellers are often forced to respond with price reductions rather than incentives, which can compress values further in competitive submarkets.
Looking back at supply over the full year, cumulative new listings from January through December 2025 reached 49,912. That figure is up 5.0 percent year over year and sits 22.5 percent above the long-term average. This confirms that seller behavior has not meaningfully slowed despite softer demand. More homeowners continue to test the market, even as absorption weakens. Historically, sustained increases in new listings without matching demand tend to extend correction periods rather than shorten them.
Pending listings tell the other side of the story. Current pending listings total 3,015, down 6.9 percent compared to last year. New construction accounts for 1,212 of these pendings, while resale homes make up 1,803. On a cumulative basis, total pendings for 2025 reached 43,724, down 1.0 percent year over year but still 7.7 percent above the long-term average. This divergence between new listings and pendings continues to be one of the most important signals in the Austin housing forecast. Supply is growing faster than demand, even though demand has not collapsed.
The Activity Index reinforces this imbalance. Today, the overall Activity Index sits at 19.4 percent, down from 22.8 percent one year ago. That represents a 14.7 percent decline in market activity. New construction shows an Activity Index of 23.71 percent, while resale activity is materially weaker at 17.34 percent. Historically, Activity Index readings above 25 percent reflect healthy, balanced demand. Readings below 20 percent are associated with market contraction and rising inventory, which is exactly where the resale segment now sits.
When viewed through the market phase framework, a significant share of resale listings now fall into contraction or crisis categories. Roughly 80 percent of resale markets are either in the contraction or freeze zone, where buyer hesitation increases and price corrections tend to accelerate. This explains why price reductions remain elevated and why absorption continues to struggle despite improved affordability compared to peak pricing.
The new listing to pending ratio provides additional confirmation. For December 2025, the monthly ratio stands at 0.92, meaning nearly one new listing for every pending contract. On a full-year basis, the 2025 new listing to pending ratio finished at 0.74, well below the 25-year average of 0.82. This gap matters. When fewer homes are going under contract relative to the number coming on the market, inventory pressure builds and pricing power shifts decisively toward buyers.
Months of inventory continues to rise as a result. Today’s months of inventory reading is 4.45 months, up 15.4 percent from 3.85 months one year ago. While this level does not yet reflect a fully buyer-controlled market, it clearly places Austin in a buyer-advantaged environment compared to recent history. Resale inventory, in particular, shows a growing share of markets moving out of neutral conditions and into buyer advantage or buyer control ranges.
Sales volume offers a mixed but important perspective. December recorded 2,545 sold properties. On a cumulative basis, 2025 closed with 30,363 total sales, down 3.3 percent year over year but still 8.0 percent above the long-term average. This indicates that while sales are slowing relative to recent years, the market is still functioning. Transactions are happening, but at prices and terms that increasingly favor buyers rather than sellers.
When adjusted for population growth, however, the picture weakens. Cumulative sold properties per 100,000 residents finished 2025 at 1,184, down 5.6 percent year over year and more than 20 percent below the long-term average. This suggests that on a per-capita basis, market participation remains subdued. Similarly, cumulative sold properties per 1,000 Realtors came in at 1,645, slightly higher year over year but still more than 22 percent below average. For agents, this reinforces the reality of a more competitive, skill-dependent environment where fewer transactions are spread across a larger professional base.
Pricing trends continue to define the broader Austin market narrative. The average sold price in December was $572,986, down nearly 16 percent from the May 2022 peak of $681,939. The median sold price tells an even clearer story. At $430,760, the median is down 21.68 percent from its May 2022 peak of $550,000. These declines reflect not just cyclical softness, but a structural reset following years of unsustainable appreciation.
Comparing today’s median price to 36 months prior shows a decline of 4.28 percent, underscoring how much of the pandemic-era appreciation has been unwound. While long-term fundamentals remain intact, short-term recovery should not be assumed. Based on Austin’s 25-year compound appreciation rate of 4.609 percent, even if the market has already reached its cyclical bottom, it would take approximately 67 months to return to prior peak pricing. That places a full recovery around mid-2031, assuming steady growth and no additional shocks.
Price performance varies across the market. Over the past year, seven cities posted modest median price gains, while twenty-three recorded year-over-year declines. In the lower quartile of the market, prices fell roughly 3.9 percent, while the top quartile remained nearly flat on a price basis but still experienced declines in price per square foot. This divergence highlights how affordability constraints are most acute in the middle and lower segments of the market, where buyers are more sensitive to interest rates and monthly payments.
Demand relative to supply remains soft when measured by absorption. The absorption rate for December stands at 22.77 percent, well below the historical average of 31.61 percent. This confirms that inventory is not being cleared quickly enough to support upward price momentum. However, the Market Flow Score registered at 8.49, above its historical average of 6.59. This suggests that while demand is weaker than normal, the market is still functioning with reasonable efficiency. Homes that are priced correctly and well positioned continue to sell, even as overall momentum slows.
For buyers, today’s Austin housing market offers leverage that has not existed for several years. Inventory is elevated, price reductions are common, and competition has cooled. For sellers, success now depends on precision, not hope. Pricing must reflect current demand, not past peaks. Investors should remain cautious, focusing on long-term fundamentals rather than short-term appreciation assumptions. Real estate agents, meanwhile, are operating in a market where data literacy, negotiation skill, and pricing strategy matter more than volume alone.
The Austin real estate forecast for early 2026 remains one of gradual normalization rather than rapid recovery. Supply is easing from extreme highs, but demand has not yet strengthened enough to restore balance. Until absorption improves and price reductions slow meaningfully, the market will continue to favor buyers who are prepared, informed, and patient.
