Stay informed: Sign up for Austin Housing Weekly to get local market news and insights delivered to your inbox, each and every week!
Home prices in the Austin metro area continue to drop in early 2025, and the downward trajectory could stretch on for several more months.
That’s the result of a recent analysis from the Home Buying Institute, using data from several sources including the Multiple Listing Service (MLS) and Zillow.
Here are six things you should know right off the bat:
- Austin’s median home price skyrocketed during the pandemic, rising by more than $200,000 in just two years.
- Prices hit an all-time record high in the summer of 2022, after which they began to fall steadily due to weakening demand.
- Austin-area home values continued falling long after most other real estate markets rebounded and stabilized.
- As of February 2025, house prices in Central Texas were still dropping with no sign of hitting bottom anytime soon.
- The Austin metro area experienced an extreme version of the “bubble-and-bust” cycle, so the effects could linger on a while longer.
- We expect home prices in this market to bottom out later in 2025, followed by a very gradual upward trend stretching into 2026.
The ‘Austin Area’ Real Estate Market Defined
This report frequently mentions the “Austin area” to describe a broader region. This shortened term refers to the Austin-Round Rock-Georgetown metropolitan statistical area (MSA).
This five-county metropolitan area located in Central Texas has a population of nearly 2.5 million people. It includes major cities such as Round Rock, Cedar Park, and Georgetown.
The city of Austin serves as the heart of this metropolitan region, with Round Rock to its north, Cedar Park to the northwest, and Georgetown further up to the north.
Going forward, all mentions of the “Austin area” refer to the metro as a whole.
Home Values Are Still Dropping in Early 2025
As mentioned above, home prices in the Austin metro area have been dropping for nearly three years now with additional declines possible.
We created the following graph to help you visualize this history. It shows the median home price for the Austin-Round Rock metro area over the past eight years or so.
The annotated parts of this graph tell the full story. Notice how Austin-area home prices shot up during the pandemic, peaked in mid-2022, and then declined all the way into early 2025.
And that brings us up to the present.
The bad news for homeowners is that prices could continue dropping for a while longer.
Zillow recently predicted that the median price for the Austin-Round Rock metro area would fall by another 1% from January 2025 to January 2026.
Related: Cheapest cities for local home buyers
Austin Anomaly: Why Prices Keep Falling
The Austin, Texas area is something of an anomaly when it comes to real estate trends.
Like many cities across the U.S., Austin experienced a surge in home-buying activity during the pandemic that caused prices to skyrocket.
Most major cities went through a post-pandemic price correction (decline) and have since rebounded or at least stabilized. Appreciation has returned.
Evidence: The U.S. median home value rose 2.7% over the past year, per Zillow.
But house prices in the Austin metro area continue to fall as of early 2025, with buyer’s market conditions evident. Here are several reasons why:
1. Overheating and Subsequent Correction
During the pandemic, Austin experienced a housing boom driven by historically low interest rates, a surge of remote workers, and an attractive economy. This led to record-breaking home price growth that many viewed as unsustainable. Once economic conditions shifted, the market began a long-overdue correction from those inflated values.
2. Rising Interest Rates and Tightening Credit
In the years following the pandemic, mortgage interest rates shot up quickly. Higher borrowing costs have reduced affordability for many buyers, which in turn weakens demand. When fewer people can afford a home, sellers are forced to lower their prices to attract buyers.
3. Excess Inventory and New Construction
To capitalize on the market’s momentum during the boom, Austin-area developers launched many new construction projects. But when housing demand cooled, the oversupply of homes began to surpass the number of buyers. This supply-and-demand imbalance (plenty of listings, not enough buyers) has further eroded prices.
4. Tech Industry Slowdown and Workforce Shifts
Austin’s rapid growth was partly fueled by its reputation as a tech hub. However, with recent rounds of layoffs and a reevaluation of tech investments, some companies have downsized or relocated. This reduction in the tech workforce has also reduced demand for housing in the area, contributing to a more prolonged price decline.
5. Changing Migration Trends
While many U.S. metro areas have seen renewed population inflows post-pandemic, Austin appears to be experiencing a plateau or even a reversal in its migration patterns. Remote work and evolving job market dynamics have led to more people reconsidering the premium paid for living in the city, which in turn affects overall demand.
6. Widespread Economic Uncertainty
Broader economic factors like inflation, combined with the widespread layoffs initiated by the Trump team, have made both buyers and investors more cautious these days. In such times, many home buyers choose to stay on the sidelines with a wait-and-see approach.
Still the Most Expensive Metro in Texas
Despite the steep and ongoing drop in home prices outlined above, the Austin-Round Rock area continues to be the most expensive metro in the state of Texas.
Here are the current (March 2025) median home values for all major metros:
- Austin-Round Rock: $440,500
- Dallas-Fort Worth-Arlington: $368,397
- El Paso, TX: $223,200
- Houston-The Woodlands-Sugar Land: $305,317
- McAllen, TX: $221,244
- San Antonio-New Braunfels: $279,648
We expect the median home price in the Austin area to eventually level off in the low-$400K range, flatline for a while, and then start creeping upward again.
But even in that scenario, Austin will continue to be the most expensive metro in Texas.
Home Price Outlook Into 2026
Eventually, the Austin-area real estate market will find a new “floor” or baseline where home prices stop falling and begin to flatten out.
We expect this to occur during the latter half of 2025. After that, house values in the area will likely begin to rise again—but at a very gradual pace. By the start of 2026, Austin home prices could be climbing steadily.
But don’t expect to see fast-rising house values anytime soon. Central Texas probably won’t see another real estate boom for many years.
Disclaimer: This report contains forward-looking views and projections related to home prices. Those views are the equivalent of an educated guess and should be viewed as such.