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By Giulia Carbonaro
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The brutal price correction that started in Austin after the end of the pandemic housing boom has continued to lower costs for buyers this year, as the Texas capital reported the biggest year-over-year price drop in the nation last month.
New data from real estate listing website Realtor.com found that the median listing price of a typical home in Austin-Round Rock-San Marcos plunged 9.8 percent to $446,450 in September compared to a year earlier. Though the cost of a home was still above the national average of $419,250 that same month, it was much below the all-time high reached of $598,000 in July 2022.
It is further evidence that Austin, once a pandemic boomtown where eager buyers fought ruthless bidding wars, is now markedly what experts call a buyer’s market—one where buyers have the upper hand over sellers. The shift occurred due to a combination of factors, including a slowdown in the domestic migration that had seen thousands of newcomers move to the Lone Star State during the pandemic and a cooldown in demand caused by higher costs.
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But the most significant factor driving down home prices in Austin was probably the flooding of new inventory on the city’s market right when demand started to fall significantly. The rapid expansion of the city’s home supply, triggered by the arrival of so many newcomers between 2020 and 2022, has piled up on the market as buyers retreated, giving them more negotiating power with sellers.
Total active listings in the Austin area were up 1.4 percent from a year earlier last month, and new listings were up 2.1 percent, showing that buyers have options—and can afford to be picky, unlike during the pandemic.
But Austin is far from the only city where this phenomenon has taken place; in fact, the entire U.S. housing market can now be considered a buyer’s market, according to experts, though only those who can afford to can take advantage of this shift.
At the national level, the median listing price fell by 1.4 percent from a year earlier to $419,250 in September, marking an 11th consecutive month of year-over-year declines, according to Realtor.com data.
Where Home Prices Are Falling Fastest
Many of the top 10 metros that reported the biggest home price drops in September compared to a year earlier were in the Sun Belt, while others were in the Mountain West, Mid-Atlantic, and Northeast regions. These were:
- Austin-Round Rock-San Marcos, TX: -9.8 percent
- Memphis, TN-MS-AR: -8.7 percent
- Tampa-St. Petersburg-Clearwater, FL: -6.6 percent
- San Diego-Chula Vista-Carlsbad, CA: -6.3 percent
- Los Angeles-Long Beach-Anaheim, CA: -5.9 percent
- Denver-Aurora-Centennial, CO: -4.9 percent
- Phoenix-Mesa-Chandler, AZ: -4.8 percent
- St. Louis, MO-IL: -4.7 percent
- Washington-Arlington-Alexandria, DC-VA-MD-WV: -4.6 percent
- Providence-Warwick, RI-MA: -4.2 percent
This list includes two other pandemic boomtowns that suffered a similar fate to that of Austin after 2022: Denver and Phoenix. As inventory exploded after the end of the health emergency and demand dropped, the markets are undergoing a stark correction that remains ongoing.
The dynamics at play in these metros, and in the rest of the country, are similar, though levels of inventory vary: there are more homes on the market than buyers willing to purchase them. That is because some of these markets added significant levels of inventory, but also because ongoing affordability issues are keeping buyers on the sidelines.
That is particularly clear in costly markets. Despite the significant price drops, the two California metros in the top 10 continue to be some of the most expensive housing markets in the country. In the San Diego metro, the median listing price of a typical home was $888,450, while in the Los Angeles metro area it was just over $1 million.
What Does This Mean for Buyers And Sellers
Price drops are bad news for sellers who have held onto properties bought at the peak of the pandemic homebuying frenzy and now have to try to offload them at a much lower price than they might have purchased them for at the time.
But falling prices are extremely good news for buyers, especially as the cost of housing remains expensive, mostly due to once-again higher mortgage rates. As of October 22, the 30-year fixed-rate mortgage averaged 7.32 percent, up from 6.19 percent a year earlier.
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But these higher borrowing costs, uncertainty over rising inflation and frustration over the cost of living’s hike in the months following the start of the Iran war are keeping buyers at bay. Many of those who could benefit from the U.S. housing market’s shift toward buyers cannot afford to make a move on the market now.
That leaves the market in a state of "hibernation," as Joel Berner, senior economist at Realtor.com, told Newsweek. "We’ve had several years of decades-low sales figures, which means two things. One, something has to change, and mortgage rates would likely have the most immediate impact," he said.
"Two, there is pent-up demand. Lots of would-be buyers who would've bought since 2023 are waiting to get into the game," Berner added. "The market will wake up and be healthy, the question is when."
Newsweek’s reporters and editors used Martyn, our AI assistant, to produce this story. Learn more about Martyn here.
Contact Newsweek editors on this story: Matthew Robinson and James Debens
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