Austin, Texas once America's hottest housing market, but now home prices have fallen more than anywhere else

The once-booming pandemic housing market in Austin, Texas, is still seeing sellers reduce their asking prices by as much as 30%, as the city continues to recover from the significant downturn of recent years.

A newly built, three-bedroom, three-bathroom house on New York Avenue, Austin, was listed on Zillow on Monday, June 24, for $899,000—over $400,000 less than its sale price in August 2023. The home, with a total living space of 1,494 square feet, was constructed just last year.

The listing describes the property as "priced to sell" and mentions "new projects in the pipeline" with investors urging to "sell it." Sellers also highlighted it as the "best value in East Austin for this price."

The dramatic price drop for the New York Avenue home reflects the end of Austin's homebuying frenzy, as sellers are now forced to negotiate with more cautious buyers. During the pandemic, Austin was one of the hottest housing markets in the U.S., with soaring demand driving prices sharply upward.

From 2020 to 2022, Austin was firmly a sellers' market, where buyers competed for limited inventory, often resulting in bidding wars that pushed final sale prices well above the asking amount.

In May 2022, the median list price for an Austin home peaked at $539,900. Moody's Analytics reported that homes in the city were overvalued by 63.7% in the first quarter of 2022.