Buyers Coming Back To The Housing Market…

It seems like everyone is asking, “Is the Austin housing market finally crashing?” The truth? We’re seeing shifts that suggest more of a reset than a full-on crash. Here’s the breakdown of what’s really going on.

Home Buyers Are Back, but There Are Shifts in Inventory

After a long period of sky-high prices and 7% mortgage rates, many buyers were sidelined. But now, there’s good news — buyers are returning to the market. According to Housing Wire, mortgage applications are up 20% year-over-year and 10% week-over-week. This is the strongest growth in 19 weeks, showing that buyers are becoming more comfortable with the current rates and the reality of the market.

Interestingly, we’re seeing pending sales up 16% year-over-year — more homes are under contract, even though we’re not seeing the typical bidding wars like before. Inventory is still rising, but just slightly, which gives buyers more choices. While not as much competition, the market is showing signs of a more balanced environment.

Sellers: Adjusting Expectations or Pulling Back?

Home sellers are facing some tough choices. With price reductions on almost 40% of listings, many are realizing they won’t get the sky-high prices they might have hoped for. In fact, sellers are starting to pull back, not wanting to lower prices too drastically.

This market isn't like 2008 — there are no mass foreclosures or underwater homeowners. But with inventory up 17% year-over-year and more homes sitting longer on the market, it’s clear that buyers have the upper hand. Sellers now need to price smartly and adjust expectations. With 5 to 6 months of inventory available, buyers can negotiate better deals, but they’re also dealing with higher-than-usual mortgage rates.

Price Cuts Everywhere: The Shift is Real

In Austin, almost 40% of active listings have had price cuts. This trend is showing up not only in new construction but also resale homes, particularly in areas like Leander, Mayer, and parts of South Austin.

While this is making homes more affordable, it also signals that prices may continue to fall. In fact, Redfin is predicting a 1% national price decline by the end of 2025, and Housing Wire is forecasting a slight increase in prices — but after inflation, that’s a real decline in value.

The bottom line: We're seeing healthy price corrections, but this isn't a crash — it's a market that’s adjusting after inflated prices.

What About Investors?

Investors, especially institutional buyers, have largely pulled back from the market. With rising rates and slower rent growth, the math just isn’t working for many investors. Investor purchases are down 30% year-over-year, and in some Sunbelt states, including Austin, we’re seeing drops of up to 40%.

This is opening up the market for primary home buyers who were previously shut out due to competition from investors. With fewer investors in the market, the chances for first-time buyers to get in are looking better.

Interest Rates and the Elephant in the Room

While interest rates are still hovering between 6.85% and 6.95%, we might see them dip below 6.5% as the year progresses. If that happens, expect more buyers to flood back into the market, potentially raising demand for both resale and new construction homes.

Mortgage rates have a huge impact on the market. When rates fall, more buyers enter, which increases competition. But, with rates staying in the 6% range, buyers are still showing up, adjusting their expectations and locking in rates that are manageable, even if they’re not ideal.

So, Is the Market Crashing?

No, we're not in a crash, and it's not likely to happen anytime soon. Instead, we’re experiencing a reset. Prices are trending down, but the market is still active, especially for buyers who are ready to negotiate.

What Does This Mean for Buyers and Sellers?

• For buyers, this is a great opportunity to negotiate. With more inventory and less competition from investors, you have room to find value — especially if mortgage rates drop.

• For sellers, pricing matters more than ever. Homes are sitting longer, and pricing too high can result in your property languishing on the market. Sellers need to be smart about their pricing and understand the market is more buyer-friendly right now.

What’s Next?

As we approach the second half of 2025, inventory is likely to remain elevated, and prices might continue to adjust downward. Buyers who can lock in rates below 6.5% could be in a prime position for the rest of the year.

If you’re looking to buy or sell in 2025, now is the time to start paying attention to the shifting dynamics of the market.

What do you think? Are you waiting for prices to drop further, or do you think the market is ready to stabilize?