National Housing Market Overview

Mortgage Rates: The average 30-year fixed mortgage rate has risen to 6.86%, the highest in three months. This increase is attributed to a volatile bond market influenced by inflation concerns and a recent U.S. credit downgrade. The Mortgage Bankers Association anticipates rates will remain volatile, hovering between 6.6% and 7% in the near future.

Home Sales: Existing-home sales declined for the second consecutive month in April, reaching the lowest April levels since 2009. High mortgage rates and record-high home prices are key barriers for buyers, with monthly payments for a median-priced home around $2,172, excluding insurance and taxes.

Home Prices: Year-over-year price growth dipped to 2.5% in March 2025. While some states like Rhode Island, Connecticut, and New Jersey saw price growth at or above 7%, others like Utah and Idaho experienced price declines.

Inventory and Affordability

Inventory Levels: The inventory of for-sale homes has reached the highest in five years. Despite this increase, affordability remains a challenge due to high mortgage rates and home prices

Affordability Gap: The affordability gap continues to widen, with median household income at $80,000 while $121,171 is needed to comfortably afford homeownership.

Austin Market: The Austin area has seen a significant decline in its Real Estate Activity Index, dropping to 21.3% in May 2025, the lowest level for this month in over a decade. Elevated mortgage rates and sustained high home prices have dampened affordability and buyer enthusiasm.

Homebuyer Sentiment: Despite high mortgage rates, some Texas homebuyers are entering the market to build equity and avoid rising rents. For instance, a 23-year-old buyer purchased a home with a 6.5% rate, preferring to begin building wealth now and refinance if rates drop in the future.

Inventory Surge: Active listings have reached 16,971, just shy of the all-time high. This marks a 25.8% increase over the historical average, indicating a significant rise in available homes.

Buyer’s Market Emergence: With a Months of Inventory (MOI) at 6.04, the market has shifted in favor of buyers, offering more choices and negotiating power.

Price Adjustments: Over half of the active listings have experienced at least one price reduction, reflecting sellers’ responses to the evolving market dynamics.

Urban Development: Transforming Austin’s Skyline

Waterline Tower: Set to become the tallest building in Texas at 1,031 feet, the Waterline Tower is a mixed-use development that will redefine Austin’s skyline upon its completion in 2026

Cap and Stitch Project: The city has approved a $104 million investment to create parks and public spaces over I-35, aiming to reconnect downtown with East Austin and enhance community engagement.

Housing Trends: Shifts in Living Spaces

Smaller Apartments: The average size of newly built apartments in Austin has decreased by 6%, with units averaging 872 square feet, aligning with national trends towards more compact living spaces.

Rental Market Dynamics: Despite a surge in new apartment developments, Austin has experienced a significant decline in rents, with prices dropping 22% from their peak in the summer of 2023.

Economic Insights: Affordability and Investment

Affordability Rankings: Austin ranks among the top affordable cities in the U.S., with a strong median household income and a cost of living that supports a favorable income-to-expense ratio.

Investment Opportunities: The current market conditions, characterized by increased inventory and price adjustments, present potential opportunities for long-term investors seeking to enter the Austin real estate market.

Featured Listing: Celebrity Real Estate Spotlight

Emma Stone’s Tarrytown Estate: Academy Award-winning actress Emma Stone has listed her renovated estate in Austin’s Tarrytown neighborhood for $26.5 million. The property features a four-bedroom main house, guesthouse, pool, and entertainment spaces, reflecting the luxury market’s offerings.

Emma Stone is selling her Austin home in the Tarrytown neighborhood due to expanding business commitments in New York. She and her husband, comedy writer Dave McCary, had initially purchased the historic estate in 2021 with plans to relocate their family there. However, over the past few years, their professional obligations, including co-founding the production company Fruit Tree, have increasingly centered in New York, where they also own a $12 million apartment. As a result, they decided it no longer made sense to move to Austin at this time.