The Austin real estate market has shifted sharply through September, breaking away from the steadier absorption we saw over the summer. After holding six consecutive weeks above a 0.8 ratio, the latest reading dropped to just 0.58, showing that barely half of new listings are being matched by pending contracts. Active listings now stand at 16,989, and nearly 58.4% of those have recorded at least one price drop. Despite mortgage rates touching recent lows last week, pendings remain well behind last year, underscoring how quickly sentiment and activity can turn when buyer psychology shifts toward waiting for “tomorrow’s deal.”

Market Overview

The Austin housing market continues to show signs of strain as we move deeper into September. After six straight weeks of strong absorption ratios above 0.8, the momentum has slowed sharply. The most recent new listing-to-pending ratio dropped to 0.58, a level that signals fewer than 60 of every 100 new listings are being absorbed by buyers. This decline highlights how quickly conditions can shift in today’s environment.

At the same time, active listings stand at 16,989, with nearly 58.4% of those properties experiencing at least one price reduction. Despite a temporary dip in mortgage rates last week to an 11-month low, buyer activity has not followed through. Instead, pendings remain well behind last year’s pace, confirming that buyer psychology is playing as much of a role as raw affordability.

Understanding the Ratio
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The new listing-to-pending ratio is one of the cleanest indicators of market health. Ratios closer to 1.0 mean new inventory is being quickly matched by contracts, while ratios in the 0.6–0.7 range show that supply is outpacing demand. Right now, the ratio’s slide to 0.58 underscores that Austin is in a tangible inventory-building phase. This doesn’t necessarily mean inventory will rise every single week—seasonal cycles always bring withdrawals and expirations in the fall—but it does mean that new product coming to market is not being met with equal buyer absorption. Agents should use this ratio to communicate with clients: it’s the simplest way to explain why active listings are rising while pendings are falling behind.

Inventory Trends and Seasonal Cycles
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Inventory typically peaks in June or July, dips into the fall, bottoms out in December, and then builds again in the spring. This year is no different. Active listings are slightly lower than last month, but that decline is driven by seasonal expirations and withdrawals—not strong buyer demand. The key distinction: if inventory were falling because buyers were scooping up homes, the ratio would be above 0.95. Instead, with the ratio at 0.58, inventory is falling only because sellers are stepping back, not because the market is absorbing supply. That makes this slowdown more concerning.

Pricing Movement
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The week ending September 22 saw 815 new listings, well below the 999 recorded the week before. Price movements showed familiar patterns:

262 price increases, with the vast majority tied to builders raising prices near month-end to create urgency with buyers.

1,837 price decreases, breaking a three-week streak above the 90% mark but still confirming downward pressure on resale pricing.

161 back-on-market listings, keeping the ratio of about 20% in line with prior weeks.

These movements emphasize a market where sellers are still adjusting downward to meet buyers, while builders selectively push increases as a sales tactic.

Mortgage Rate Environment

Rates remain relatively steady after recent improvement. As of this meeting:

30-year conventional: 6.5%

15-year conventional: 6.125%

FHA/VA/USDA: 5.875%

Jumbo: 6.125%

Investor loans: 6.875% with one point

Despite reaching a low of 6.375% last week, rates ticked up slightly, and the bond market remains volatile. Importantly, even in a favorable rate environment, pendings did not pick up, reinforcing that today’s slowdown is psychological, not purely financial.

The Buyer Mindset

A key theme of the meeting was the shift in buyer psychology. Buyers are:

Ready and able, meaning they qualify for financing and can handle current payments.

Not willing, because they believe tomorrow’s rates, prices, or inventory will be better than today’s.

This “deflationary mindset” is the opposite of the inflationary urgency that drove the 2021–2022 frenzy. Instead of rushing to buy before prices rise, buyers are hesitating, convinced that waiting will pay off. This mindset is reinforced by highly visible price declines. Case studies of properties purchased in 2021 or 2022 and now listed below their original purchase price serve as evidence to buyers that patience is being rewarded.

Downtown Austin Spotlight: 78701

The downtown Austin market is under particular pressure. As of mid-September:

233 active listings

Only 9 pendings

Activity index: 3.7%

Months of inventory: 11.85

Entire price bands in the $350,000 to $950,000 range have active listings but no pendings. This void of buyer activity highlights the hyperlocal extremes of today’s market. While some suburban areas like Kyle are seeing strong 30% activity indexes, downtown is nearly frozen.

Distressed Properties and Transparency

The meeting also addressed distressed sales. The MLS shows:

72 short sales

14 pre-foreclosures

9 in foreclosure

93 real estate owned (REO)

However, these numbers understate reality. Realist data shows 2,472 properties in various stages of foreclosure across the six-county area. The gap exists because many agents do not properly mark “special listing conditions” in the MLS, either due to lack of training or deliberate omission. For investors, this creates opportunity. For agents, it is a reminder: compliance and transparency matter. Properties should always be presented with accurate conditions.

Broader Economic Context

This week is a busy one for economic data that will influence mortgage rates and market sentiment. Key events include:

Tuesday: Fed Chair Powell’s remarks and M2 money supply update.

Wednesday: Building permits, new home sales, and a 5-year bond auction.

Thursday: Core PCE inflation, GDP final revision, and personal consumption data.

Friday: Major inflation numbers, including personal income and spending.

These reports could push bond yields and mortgage rates in either direction. A softer-than-expected inflation reading would be positive for mortgage rates, while hotter numbers could reverse recent gains.

Takeaways for Agents and Investors

The September 22 Monday Touch Point underscored several critical points:

The 0.58 ratio confirms supply is outpacing demand.

Buyer hesitation is driven by psychology, not just affordability.

Downtown Austin (78701) is a clear example of hyperlocal weakness.

Distressed property opportunities are growing, but MLS reporting lags behind Realist data.

Agents must lean on data authority to guide clients—not predictions. For agents, the call to action is simple: publish the “Top 100 Opportunities,” stay engaged with your database, and explain today’s ratios and psychology in plain terms. For investors, the environment is shifting toward opportunity in distressed and undervalued properties, particularly as sellers grow more flexible.

Conclusion

The Austin market is in transition. After a summer of relatively balanced absorption, September has brought a tangible slowdown in buyer activity. Active inventory remains high, pendings are lagging, and pricing continues to adjust downward in many areas. This is not a time for guessing—it’s a time for clear, data-driven conversations with clients. By leaning on ratios, price movement, and buyer psychology, agents can help their clients cut through the noise and make informed decisions in a challenging but opportunity-rich market.​