AUSTIN (KXAN) -- The housing supply in the Austin-Round Rock-San Marcos metropolitan statistical area (MSA) continues to grow, which is already serving to push down the area's median home price, according to the Austin Board of Realtors (ABoR).
ABoR's mid-year report (released on July 12) said that the market has seen a 25.9% year-over-year increase in active home listings for June -- enough to meet buyer demand for the next five months. The group also claims that this growth returns the MSA to an availability level last seen in 2011.
Within the City of Austin, current inventory is also up (43.4% YoY) to 5.8 months.
More options for buyers means more competition for sellers. The report suggests that factor, combined with rising mortgage rates MSA-wide, has caused a 6.3% drop in the median sales price compared to June 2023.
ABoR economist Dr. Clare Knapp noted that compared to last year, the MSA has also seen a 13.4% decline in sales.
“In June, and the first half of the year, we’ve seen sellers remain resolute in their price point, a main factor behind the decline in sales," said Knapp in the release. "The market will continue to find its footing in the latter half of the year, proving that both buyers and sellers will need to remain nimble and work closely with their realtor to find and negotiate their best option.”
Austin sales were down 21% compared to June 2023, but the median Austin listing price only dropped by 1.6%. Still, that price was an extra $150,000 compared to the MSA's median.
ABoR president Kent Redding said in the release that key factors for sellers are price and presentation, but that a listing's prolonged time on market is a major hurdle. He recommends for buyers to be more competitive in their offers to take advantage of high inventory.
“For the remainder of the year, both buyers and sellers need to adjust the way they navigate the market. Homes are selling at 96.4% of the original list price, but the homes that are selling are moving because they are showing well and priced appropriately," said Redding in the release.
In June, the average closing in the MSA landed at 96.4% of its listing price (up from 94.7%); for Austin, it was 95.2% (down from 95.48%).
KXAN spoke with Knapp on Wednesday, who said that the report's data suggests that many sellers are being inflexible on price and unwilling to negotiate. This mindset may be stuck in a market that is ceasing to exist.
"That's probably a byproduct of what we saw during the pandemic, when homes were really flying off the shelves. We're still seeing remnants of that mentality amongst sellers," Knapp said. "It is going to be important for those sellers to be willing to negotiate a little bit more moving forward, especially amid such a strong uptick and active listings."
The Austin MSA isn't a seller's market at the moment, but that doesn't mean buyers can celebrate.
"It's really a neither nor market when we're thinking about whether it's a buyer's or seller's market. In my opinion, there's just no clear delineation," Knapp said.
It appears unlikely that the local housing market will suddenly shift one way or another.
"Buyers are really facing affordability constraints from higher mortgage rates and higher home prices. However, they do have more supply on the ground available to them," Knapp said. "On the flip side, sellers are contending with more competitors in the market...but they're also kind of receiving this tailwind of higher home prices [during the COVID-19 pandemic], and they still have that underlying home equity."
Some of the other factors at play include high mortgage rates, rising insurance premiums and buyer's decreased purchasing power. Even a change to interest rates is unlikely to dramatically shift mortgage rates, Knapp said.
"The market is predicting that there could be three rate cuts, I think that's a very ambitious projection. But say that we do see those three rate cuts...it really isn't necessarily going to translate meaningfully into a decline in mortgage rates, Knapp said. "We don't anticipate that any sort of change in mortgage rates will induce a significant uptick in buyer demand. What we really need to see in the Austin market is more of a response from the market to this significant uptick in active listings that we've seen...prices really need to factor in that increased supply."
