Fed Holds Rates Steady Amid Cooling Inflation
On June 18, the Federal Reserve announced it would keep interest rates unchanged, maintaining the federal funds rate target range at 4.25% to 4.50%. Although inflation remains above the target level, the Fed reaffirmed its data-driven strategy and left the door open for up to two potential rate cuts later this year.
Meanwhile, according to the U.S. Bureau of Labor Statistics, May 2025 saw the Consumer Price Index (CPI) rise just 0.1% from the previous month, with the annual inflation rate slowing to 2.4% – one of the mildest increases this year. The core CPI remained at 2.8%, indicating easing inflationary pressures.
This downward trend in inflation increases the likelihood of a fall rate cut, which could help stabilize borrowing costs and support recovery in the housing market.
Greater Austin Market Overview
After a period of price correction, signs of buyer re-engagement have become increasingly evident in Austin’s housing market this spring.
New under contracts by week in May exceeded levels seen in both 2023 and 2024, reflecting a steady increase in market momentum. This suggests buyers haven’t disappeared – they’ve simply become more discerning.
Among properties that underwent price drop, the median days from price drop to under contract was just 17 days, compared to a 29-day overall market median, indicating that buyers are waiting for fair value and acting swiftly when they see it.
Over the past decade, Great Austin home prices saw significant growth from 2020 to 2022 before softening in the following years. Yet, the 2025 median sale price remains above pre-pandemic levels. With current prices stabilizing around $435,000, the market appears to be entering a more balanced phase rather than reverting to prior lows.
Greater Austin Market Snapshot – May 2025
Amid cooling inflation and steady interest rate expectations, the Greater Austin area has shown signs of a housing market rebound.
The median sale price in May was $449,900, down 1.6% year-over-year. While total sales dipped to 3,021 (a 3.8% decline), new listings rose nearly 9%, reflecting rising seller confidence. The strong rebound in Pending Sales signals growing alignment between buyer and seller expectations.
On the leasing side, median rent remained steady at $2,295. While closed leases dipped slightly to 2,327, Pending Leases rose to 2,714, a 1.3% year-over-year increase. The average time on market dropped to 39 days, and 97.7% of rents closed near the original asking price, highlighting sustained renter demand and market efficiency.
County-Level Market Highlights
City of Austin
City of Austin Austin proper saw a median sale price of $595,000. While total transactions held steady, Pending Sales jumped by 21.2%, reflecting strong interest in centrally located properties.
On the rental side, rents held at $2,500, with leasing cycles shortening to 39 days. Although closed lease volume declined slightly, demand for well-priced units remains high.
Travis County
Home prices in Travis County declined compared 5.1% to last year, and inventory lingered longer on the market. However, a rise in Pending Sales suggests that some buyers are actively taking advantage of the pricing adjustment.
Rent levels softened to $2,400, and both listings and leases declined. That said, a modest uptick in Pending Leases signals that tenant demand remains, even amid cautious market behavior.
Williamson County
Median home prices in Williamson County declined by 2.3% to $425,000. While closed sales declined by 3.3%, the number of Pending Sales climbed 16.3%, signaling renewed buyer activity. New listings surged by 13.6%, and active listings jumped over 26%, adding more options to the market.
Rent slightly dipped to $2,200, and units rented the fastest in the region, averaging just 34 days on the market.
Hays County
In Hays County, prices stabilized at $384,990, showing no major year-over-year change. Closed sales reached 524 homes, a 7.2% increase from last year, and an 18.2% increase in Pending Sales reveals continued buyer interest.
Rent levels fell to $2,000, and both lease closures and new leases dropped, pointing to a temporary slowdown in the leasing sector.
Bastrop County
Bastrop’s median home prices increased to $350,000. However, longer market times and increased listings reflect more cautious buyer behavior.
Rent climbed to $2,250, but closed leases declined and listings increased slightly, indicating hesitancy among renters in response to rising prices.
Caldwell County
Home prices saw a big jump in the region, with a median price increase of 8.5%. However, this came alongside a sharp 32.4% decline in closed sales, with just 43 homes sold in May. While inventory rose and active listings increased nearly 29%, Pending Sales dropped 36.3%, indicating that higher prices may be outpacing buyer demand for now.
On the rental side, median rent fell to $1,750, while days-on-market shortened to 39, signaling relatively brisk lease activity among lower-priced units.
Market Summary: Prices Leveling, Activity Picking Up
Data from May indicates that Austin’s housing market is entering a post-correction recovery phase. With inflation pressures easing and interest rates stable, buyer hesitation appears to be fading and transaction volume is rising.
Overall, the market is trending toward equilibrium. This is a key moment for investors and homebuyers to reassess entry points and long-term positioning.
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