Home Prices Surge Across Major U.S. Cities, Except Austin

Home affordability has worsened in most major U.S. cities, with the notable exception of Austin, Texas. According to a report by online realtor Redfin, Austin is the sole city among the 50 largest real estate markets in the U.S. to witness a decline in home prices for the 12 months ending in November.

During this period, home sale prices in the metro Austin area dropped by 6.2%, with homes selling for a median price of $424,990, marking a decrease for five consecutive months. Additionally, median rent prices in Austin experienced a 5.4% decline for the year ending in November 2023, making it the second-largest decrease among the 50 largest cities, according to another Redfin study.

The situation in Austin reflects the rapid shifts seen in real estate markets, particularly amidst the low-interest house-buying fervor during the pandemic. Despite Austin’s home prices being elevated above the national median, buyers have exhibited greater reluctance to invest in the market, contributing to the decline in prices observed in 2023.

Austin’s real estate market dynamics exemplify the effects of its own popularity. Initially deemed relatively affordable, the city witnessed a surge in migration during the pandemic, fueled by factors like low interest rates and remote work opportunities. However, this influx of new residents led to a significant uptick in home prices, reaching a peak in April 2022 when median home sale prices in the Austin metro area surged to $555,000—a notable 88% increase from 2019.

Subsequently, prices have moderated, currently resting at a median of $424,990—still considerably higher than the national median. Rental prices in Austin have mirrored this trend, with rates declining due to the construction of new rental units and a decrease in population growth.

Despite these shifts, Austin’s housing market remains tepid, with homes taking longer to sell as buyers exhibit caution in response to high interest rates. While this poses challenges for sellers, it signifies a return to a more balanced market after a period of overheating.

Looking ahead, the market’s trajectory may hinge on mortgage rate movements. Although rates have declined from their peak in October, a lower mortgage rate is unlikely to fully counterbalance the significant increase in home prices witnessed in Austin over the past four years.