Austin-area home sales, prices fall in May. Pending sales, supply are rising.

The Austin-area housing market is showing signs of resilience heading into summer, but economic uncertainty is affecting confidence and sidelining some prospective buyers.

The latest monthly report from the Austin Board of Realtors shows the number of newly listed homes for sale in the Austin-Round Rock-San Marcos metro area jumped 8.9% in May to 5,716, pushing inventory to a supply of five months. That’s a month more than the same time a year ago. The total number of listings — all homes on the market across the metro from Georgetown to San Marcos — soared 17.4%, pushing the total to 14,670.

As more houses hit the market, sales declined 3.8% to 3,021 and the median sales price edged down 1.6% to $449,900. The median means half the homes sold for more than that amount and half for less.

A MONTH AGO: Austin-area housing market continues to shift in buyers’ favor

Within Austin city limits, sales declined even more, falling 5.8% in May from a year ago, with the median price down 2% to $595,000.

Locally and across the country, experts say factors including higher mortgage interest rates, concerns over tariffs and the risk of recession have made some buyers wary, leading to mounting housing inventory.

Despite May’s declines, pending sales climbed 16.1% to 4,515 in the pipeline — the strongest month of the year, the board said. Pending sales are a key indicator of future sales.

"The notable increase in pending sales in May signals that buyer activity has picked up after a challenging first quarter," Clare Knapp, housing economist for the Austin Board of Realtors, said in a statement. "While higher mortgage rates continue to impact buyer confidence, these trends point to cautious optimism as we move into the summer."

The May data reflects "healthy market adjustments that could ultimately lead to more balanced conditions for buyers and seller," she said.

The increasing supply of homes continues tilting the market in buyers’ favor, giving them more choices, and more negotiating power.

"This is probably the best buyers’ market we’ve seen in the last seven to 10 years, with sellers more willing to negotiate," said Mark Sprague, a housing market analyst with Independence Title in Austin.

Knapp said a slowing market "can motivate sellers to adjust prices to better align with what buyers can afford."

"We’re seeing that dynamic begin to unfold in Central Texas," she said. "It’s not that demand has disappeared — buyers still want homes here, but affordability remains a key factor. Many are waiting for the right opportunity or more favorable pricing."

May’s sales figures reflect homes that went under contract in March and April, months that traditionally signal the beginning of the spring selling season, said Eldon Rude, a longtime Central Texas housing expert.

"However, like most markets across the country, in Austin the spring market is being negatively impacted by the increasing levels of uncertainty among consumers about the direction of the economy," said Rude, principal of 360° Real Estate Analytics, an Austin-based consulting firm.

"Looking forward, homeowners who are in a position where they must sell their homes will continue to do so, while many will wait until conditions are more favorable to sell," he said. "At some point the growing pent-up demand in the Austin market will pave the way for increasing sales, with the two key triggers being renewed confidence in the economy and lower mortgage interest rates."

Brandy Wuensch, president of the Austin Board of Realtors, said the May data points to "signs of a bounce-back, which is encouraging after a slower start to the year." Homes that are priced competitively are still selling well, she said.

"Central Texas continues to be a place where people want to live, but many are waiting for market conditions that match their financial readiness," Wuensch said in a statement.

The last 120 days of consumer uncertainty has slowed the housing market, Sprague said. But even though inventory has crept up, "we are not seeing huge discounting with most resales."

Pre-owned homes generally are selling within 2% to 3% of their last list price, Sprague said, although sellers in outlying areas who are competing with new builders offering interest-rate buydowns and other concessions face tougher competition.

The market cooldown will slow new construction starts, Sprague said, with builders starting 10% fewer homes this year than last. As with resales, sales of new homes have slowed, even with strong builder incentives, he said.

Prospective buyers waiting on rates to drop early this summer will be disappointed, though. Sprague forecasts that rates will stay between 5% and 7.5% throughout the year as the Federal Reserve continues to deal with inflation.

He’s also watching consumer and business confidence and spending to make his calls on the real estate market.

"Once the consumer confidence improves, then people will start buying houses, cars, computers, etc.," Sprague said.

Earlier this year, he predicted home prices would grow at a slower, more sustainable pace compared to the rapid increases seen in the Austin area in recent years. But the local market, though shifting, remains stable, he said Monday.

"Austin still ranks in the nation’s top 10 for its population growth rate. Austin still ranks in the nation’s top 10 for its job growth rate. Austin still ranks in the nation’s top 10 for apartment absorption," Sprague wrote in an email. "The short-term choppiness/slower market doesn’t negate long-term positive Austin and Texas tailwinds."