Home sales in the Austin area tumbled almost 5 percent in July — the second month this year to see a sales drop — but prices continue to rise.
That’s according to the latest monthly report from the Austin Board of Realtors, which said the market remains healthy overall, even as affordability concerns loom.
Home sales in the five-county Austin metro area declined 4.9 percent from the prior July, with 2,900 houses changing hands, the board said Thursday. The metro area consists of Travis, Williamson, Hays, Bastrop and Caldwell counties.
The last time Austin-area sales declined year-over-year was in January.
“When it comes to sales volume, we’ve grown very used to seeing year-over-year increases every single month, but it’s important to remember that 2015 had the strongest summer selling season in the region’s history,” said Aaron Farmer, president of the Austin Board of Realtors. “The value of Central Texas real estate has continued to increase, which is good news for homeowners, but those rising prices could start to have a cooling effect on sales volume in the market amidst growing affordability challenges.”
Among the area houses that sold last month, half went for more than $285,000 and half for less, marking a 5.6 percent jump in the median sales price, the board said.
With housing prices in the local market at record highs, it now takes 45 percent of the median income to purchase a median-priced home in Austin, said Jonathan Smoke, chief economist at Realtor.com.
Smoke said the decline in July sales “likely represents a shift to a more normal pace of activity … but the shift is also a reflection of higher prices causing affordability or qualification challenges, especially for younger and first-time buyers.”
“Home prices are at their highest level in history in Austin, and as a result more existing homeowners have been putting their homes on the market this year,” Smoke said. “That’s a key reason why inventory is up 6 percent compared to last year. By contrast, the U.S. overall continues to see fewer homes on the market compared to last year, as not all markets have seen home values recover, let alone set new records.”
Within Austin’s city limits, the median sales price climbed to $345,000 in July, up 4.6 percent from the previous July, the board said. Sales fell 7.3 percent citywide, steeper than the region as a whole.
Mary Weaver with Sente Mortgage in Austin said July’s lower sales volume likely isn’t indicative of a longer-term trend.
“Austin is still a booming market — we saw steady increases through the second quarter of the year, and sizable jumps compared to 2015 numbers,” Weaver said. “We’re already seeing August business is up compared to July.”
Martha Bowles, a real estate agent with Reilly Realtors, said that with the “exponential and almost overwhelming growth” the Austin area has been having, “any slight change to the effect where sales slow down in the slightest can feel like a large alteration. We feel it more intensely because we’re used to such a fast pace.”
Bowles said homes priced below $200,000 are still selling very quickly, in a week or less. At this time last year, however, “it would be 24 hours or under,” she said.
“People are being more selective and not jumping in head first just because (a house) becomes available,” Bowles said. “Before it was, ‘Let’s put (an offer) in before anyone else does, and then decide if we like it.’ Now, they have more power to make better choices.”
Charles Heimsath, an Austin-based real estate consultant, said the sales decline “probably reflects a combination of ‘buyer fatigue’ due to multiple-offer competition, a change in demographics where potential buyers choose to rent, and excessive 100-degree heat” that kept people inside.
Diane Johnson, team leader of Keller Williams Realty Austin, also cited buyer fatigue, saying many buyers “are choosing to stay out of the bidding wars. We expect they are waiting for the market to cool to buy.”
Blake Taylor, broker and owner of Taylor Real Estate in Austin, said, “A cooling from the frantic pace of the past two years may be a healthy adjustment for the long-term stability of Austin’s housing market.”
We asked housing industry experts: Could the Austin housing market weather a national downturn? Find out their answers in our Sunday Business section.