Austin Housing Market Forecast

Given the enormous popularity of the greater Austin, Texas, area for online searches, newcomers and employment growth, it may act as a reasonable bellwether for the state of the U.S. housing market. This will certainly be tested in the spring and summer selling season, when the National Association of Realtors reports that about 40% of sales of existing homes throughout the U.S are historically made between the months of May and August. Besides offering warmer weather, buying a home during these months allows buyers with school-aged children to shop, bid, close and move into a new residence before the start of a new school year.

Similar to the overall U.S. housing market in mid-2020, the Austin housing market went into serious overdrive marked by a sharp decline in months of inventory, bidding wars and rising prices as sales jumped, fueled by buyers eager to take advantage of record-low mortgage rates. Flash forward to early 2023, and both the Austin and national housing markets are taking a bit of a breather, featuring more supply, falling prices and more careful buyers ensuring that making a deal in an environment of higher mortgage rates still makes financial sense.

However, for buyers of newly built homes, the current overhang of unsold inventory is unlikely to last, given how assertive some builders with in-house mortgage subsidiaries can be with incentives such as mortgage-rate buydowns as low as 4% to 5%, especially for those who can close quickly.

Using information from the U.S. News Housing Market Index, we’ve compiled the data you need for a better understanding of the current state of the market. Here’s what you should know about how the Austin housing market has changed in the last year and looking ahead into mid-2023.

How the Austin Housing Market Changed in 2022

As the demand for housing continued to rise in Austin in the early months of 2022, builders of both homes for sale and for rent ramped up production, with the number of building permits pulled nearing 4,400 in March 2022. However, as mortgage rates started to rise along with higher inflation throughout the year, building permit issuances steadily fell to under 2,100 by January 2023. During the three-month period ending in January 2023 versus the same months a year earlier, the number of overall permits issued fell by 38.5%.

For single-family detached homes, the rise in building permits peaked several months earlier than for multifamily units, edging up to over 2,400 units in March before trending down to about 700 units by December. While detached home permits did rebound to approach 900 in January, they’re still down by 53% for the three-month period ending in January 2023 year-over-year.

 With households increasingly priced out of single-family detached homes for sale, they continued to turn to the condominium and apartment markets for new housing, so the peak in multifamily developers pulling permits didn’t occur until July. Since then, as the demand for apartments began to wane, the overall trend for permits also declined. During the three-month period ending in January 2023, 24.8% percent fewer multifamily permits were requested versus the same months ending in January 2022.

Read Article Here: