The Austin housing market exploded in 2020, peaked in 2022, and crashed in 2023.
Now, as we approach 2026, a lot of people are asking the same questions:
- Will Austin-area home prices go up or down in 2026?
- Is the housing market finally starting to stabilize?
- Will 2026 be a good time to buy a house in Austin?
- Will it be a buyer’s or seller’s market next year?
General forecast: The Austin-Round Rock metro is currently a buyer’s real estate market with falling home prices and excess inventory. This will probably continue into 2026.
Austin-Area Housing Market Predictions for 2026
Future real estate trends are difficult to predict because there are many variables involved, combined with unforeseeable events.
Even so, we can make an educated guess on where the market might be headed.
Here are five predictions for the Austin real estate scene in 2026:
- Expect home prices to decline further before leveling off.
- Prices might hit bottom sometime in Q3 – Q4 of 2026.
- Buyer’s market conditions will persist into 2026.
- Mortgage rates could stabilize in the low 6% range.
- Excess inventory will begin to be absorbed next year.
1. Home prices could decline further.
Prediction #1: Austin-Round Rock home prices will continue to fall through the rest of 2025 and into early 2026, at least.
The following chart shows the median home price for the Austin-Round Rock metropolitan area. It’s based on data provided by Zillow.
A couple of things will jump out at you when viewing this chart:
- First, you can see where prices skyrocketed from 2020 until mid 2022. That was the pandemic effect, which caused a surge in migration to the Austin area.
- Secondly, you can see how prices peaked in the summer of 2022 and have been declining ever since.
And that’s where we are today, as of fall 2025. The Austin real estate market is still experiencing price declines that could stretch into the first half of 2026.
2. Prices might hit bottom sometime in Q3 – Q4 of 2026.
Prediction #2: After dropping for several years, home prices in the Austin-Round Rock metro area could hit bottom during the second half of 2026.
Eventually, house prices in this market will drop to a level where they better align with buyer demand and affordability.
When that happens, prices will probably (1) stop falling, (2) remain flat for a while, and (3) start rising gradually again.
Based on current supply-and-demand conditions, migration trends, and other factors, we expect Austin-Round Rock home prices to hit bottom sometime during the second half of 2026.
This could give buyers a chance to purchase a home at the lowest point in the current price cycle, with the prospect of steady appreciation going forward.
But timing the market is difficult. It’s generally wiser to buy a home when it makes sense for you personally and financially, rather than trying to predict a future “sweet spot.”
3. The buyer’s market will continue into 2026.
Prediction #3: The buyer’s market conditions that have existed throughout 2025 will probably remain in place during the first part of 2026.
The Austin metro area is basically one big buyer’s market in 2025.
Home buyers have plenty of properties to choose from, plenty of time to make their decisions, and more negotiating leverage when it comes to the sale price and other terms.
Those favorable conditions apply to most of the surrounding area as well, including Pflugerville, Georgetown, Cedar Park, Leander, and San Marcos.
(This is the polar opposite of what we saw during the pandemic, when a surge in demand transformed Austin into a strong seller’s market.)
But how long will it last?
Some housing market forecasts suggest that the Austin area will continue to favor home buyers through the end of this year and into 2026 — a reasonable prediction based on current trends.
4. Mortgage rates could settle in the low 6% range.
Prediction #4: Gradually declining mortgage rates could bring more buyers back into the market, especially if prices stop falling.
During the pandemic, record low mortgage rates in the 3% range contributed to a surge in homebuying activity – both in Austin and nationwide.
But in the years after that, mortgage rates rose and reduced the demand among buyers. Higher rates and home prices created affordability issues and that would eventually cool down an overheated housing market.
More recently, mortgage rates have been trending downward, and some experts expect that trend to continue into 2026.
According to a September 2025 report from mortgage buyer Fannie Mae:
“Mortgage rates are forecast to end 2025 and 2026 at 6.4 percent and 5.9 percent, respectively, according to the September 2025 Economic and Housing Outlook from the Fannie Mae (FNMA/OTCQB) Economic and Strategic Research (ESR) Group.”
If rates decline next year as predicted, it could increase buyer demand within the Austin area and tilt the housing market toward neutral territory.
5. Excess inventory will begin to be absorbed next year.
Prediction #5: Over the next 12 to 18 months, buyer demand could slowly increase resulting in gradual inventory declines and a more balanced market.
The Austin-Round Rock real estate market currently suffers from having excess supply. There are a lot of homes on the market, but not enough buyers to absorb them.
Because of this, most properties sit on the market for well over two months before going under contract. That puts downward pressure on home values across Central Texas.
But mortgage rates have declined during the second half of 2025, and they could fall further in the coming weeks. This might bring more buyers into the market, especially if prices stop falling.
In 2026, we expect supply levels within the Austin housing market to decline, with excess inventory falling back to a more balanced level.
Key Takeaways for Buyers
- Falling prices create opportunity. Austin-area home prices are declining and could hit bottom in late 2026, giving buyers a window of opportunity.
- You have negotiating power. With higher inventory and slower sales, buyers can take their time and often negotiate better prices and terms.
- Affordability may improve. If mortgage rates ease into the low-6% range as expected, monthly payments could become more manageable for many buyers.
- Timing the bottom is difficult. The best time to buy is when it makes financial sense for you. Trying to time the market rarely pays off perfectly.
- Expect a gradual recovery. Once the market stabilizes, home values are likely to rise slowly, offering long-term growth potential for those who buy in 2026.
Key Takeaways for Sellers
- Prepare for a slower market. Homes are taking longer to sell, and buyers have plenty of options. Patience and flexibility are mandatory.
- Price it realistically. Overpricing can lead to longer time on market and a higher potential for price reductions later on.
- Incentives attract buyers. Offering to cover closing costs, provide rate buydowns, or make small upgrades can make your home stand out.
- Keep the faith. If forecasts hold true, inventory levels may shrink and demand may rise by late 2026, helping sellers regain some leverage.
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