December 15, 2025 Monday Touch Point

December 15, 2025 - Monday Touch Point

This week’s Monday Touch Point focused on weakening buyer demand, rising inventory pressure, and increasing pricing friction across the Austin market. Despite improved rate conditions, pending activity continues to lag last year, confirming that affordability and confidence—not financing alone—are limiting buyer commitment. Elevated withdrawals, growing price reductions, and off-MLS distress activity are reshaping supply dynamics. Strategic pricing, data-driven expectations, and disciplined execution remain essential as the market moves into 2026.

Market Momentum Heading Into 2026

This week’s Monday Touch Point focused on one core reality: the Austin real estate market continues to weaken beneath the surface, even as headline metrics may appear stable. As the year closes, the data shows a widening disconnect between inventory entering the market and buyer demand actually absorbing it. That gap matters far more than short-term rate movements or month-to-month price noise.

Looking ahead to 2026, the approach remains unchanged. Markets move in cycles, but daily execution does not. Whether the market is flat, declining, or briefly stabilizing, the responsibility stays the same—understand the data, adjust strategy, and operate with discipline.

New Listings vs. Pendings: Demand Is the Problem

The most important metric discussed was the new listing to pending ratio, tracked weekly rather than monthly to avoid lagging indicators. Over the past several weeks, Austin has underperformed the same period last year on a year-over-year basis. Even during weeks when the ratio briefly moved above 1.0, last year’s benchmarks were materially stronger.

This week opened with a ratio near 0.66, up from 0.59 the prior week but still far below seasonal expectations. Historically, December is when the market naturally crosses above 1.0 as inventory tightens. That did not happen this year. Instead, demand stalled despite better rate conditions than last December, confirming that rates alone are not driving buyer behavior.

Monthly Data Confirms Structural Weakness

At the halfway point of December, new listings are on pace to exceed last year’s totals, while pending transactions are down sharply. Pendings are currently tracking over 60 percent below last December at the same point in the month. When the full year is tallied, the market is likely to finish with roughly 300 fewer pending transactions than last year.

This is not a seasonal anomaly. It is a demand contraction.

December is now shaping up to be the first December since 2011 where new inventory meaningfully outpaced absorption. Even during prior downturns, December typically showed better balance than what is currently unfolding.

Withdrawals, Expirations, and Seller Fatigue

Seller exhaustion is becoming increasingly visible. Mid-month data already shows hundreds of withdrawn and expired listings, pushing the year-to-date total near 17,000 properties exiting the market without selling. This reflects affordability pressure across the board—higher insurance costs, energy expenses, and everyday living costs are limiting buyer capacity, even when pricing adjusts.

This environment is creating a feedback loop: price reductions rise, but buyer confidence remains hesitant, reinforcing longer market times and further withdrawals.

Pricing Trends and Compression at the Top

Average and median prices are sending mixed signals. Month-over-month pricing has improved, which is typical for December, while year-over-year medians remain under pressure. The more important trend is price compression, particularly in the upper quartile of the market.

Across a majority of tracked cities, the top 25 percent of homes are underperforming the bottom 25 percent. Builder incentives are masking price weakness in some areas, but resale activity tells a clearer story—higher-priced segments are absorbing slower and discounting more aggressively.

City and Zip-Code Divergence Is Growing

Market conditions vary dramatically by location. Some cities are still operating within seller-leaning conditions, while others are approaching multi-year inventory highs. Several zip codes now show double-digit months of inventory, with a handful exceeding 30 to 40 months, effectively removing price support.

At the same time, select areas are showing early signs of stabilization, underscoring the importance of hyper-local analysis rather than broad metro averages.

Distress Signals and Off-MLS Activity

Short sales, pre-foreclosures, auctions, and bankruptcies have increased materially over the past two years. While traditional REO listings remain muted on the MLS, lenders are increasingly using off-MLS auction platforms to liquidate assets quietly. This prevents distressed pricing from directly impacting comparable sales, but it does not eliminate the supply—it simply relocates it.

Agents who understand where this inventory is being sold will have a competitive advantage as distress continues to surface.

Why Weekly Data Matters More Than Ever

Sold prices and months of inventory are backward-looking by nature. Weekly demand metrics, activity indexes, and absorption rates provide real-time insight into what buyers are doing right now—not what they did six weeks ago. In this market, relying on lagging indicators creates risk for pricing, negotiations, and client expectations.

The takeaway is simple: data clarity creates confidence, even in uncertain markets.

FAQs

1) Why is the new listing-to-pending ratio more important than sold prices right now?

Sold prices are a lagging indicator. A sale you see today typically reflects decisions made weeks ago when the buyer wrote the offer, negotiated, and closed. The new listing-to-pending ratio is closer to real-time demand because it measures how many new listings are coming in compared to how many properties are actually going under contract right now. When that ratio stays weak in December—when we normally expect inventory to tighten—it’s a clear signal that buyer demand is not absorbing supply at a normal seasonal pace. That’s why we track it weekly: it tells you what the market is doing now, not what it did last month.

2) If mortgage rates are better than last year, why are pendings still down?

Rates matter, but they’re not the only lever. Buyers are reacting to monthly payment reality, job and income uncertainty, and overall cost-of-living pressure. Even with slightly better rates, many buyers are still facing high payments because prices remain elevated relative to incomes, insurance is up, and taxes/HOA costs can be heavy. On top of that, a “wait and see” mindset can become self-reinforcing—buyers hesitate because they believe prices may be better later, or because they don’t feel urgency. The data is showing exactly that: improved rate conditions without a matching improvement in pending activity.

3) What does it mean when withdrawals and expirations rise—and why should sellers care?

High withdrawals and expirations usually mean sellers are hitting a wall. They either don’t like the feedback the market is giving them on price, they’re tired of showings with no offers, or they’re unwilling to reduce enough to meet demand. This matters because it can create two outcomes at the same time: it reduces visible active inventory (which can make the market look tighter than it really is), and it builds “shadow supply” that may come back later if sellers relist. For sellers, it’s a warning sign that pricing and presentation have to be sharp from day one. For agents, it means you must set expectations clearly: the market is rejecting overpriced listings faster than it used to.

4) Are foreclosures and short sales actually increasing, and how does “off-MLS” impact the market?

Distress signals are rising—short sales, pre-foreclosure activity, auctions, and bankruptcies have all moved up meaningfully compared to two years ago. What’s different this cycle is how some lenders are handling it. Instead of pushing everything through the MLS as REO listings, a portion of distressed inventory is being routed through auction sites and alternative platforms. That matters because it keeps some discounted sales from becoming obvious in MLS sold comps, which can slow down how quickly the broader market “feels” the impact in pricing conversations. But it doesn’t eliminate the supply—it just changes where it trades. Agents who can identify and track these sources are better positioned to help investors and buyers who ask about distress inventory.

5) What should agents focus on right now to win listings and protect clients in this market?

Start with the data that moves first: weekly pendings, list-to-pending dynamics, price reduction rates, and local activity index. Then translate that into strategy. For listings, price correctly upfront and build a clean plan for the first 14 days—photos, positioning, showing access, and a realistic pricing narrative. In this environment, the market punishes “test pricing.” For buyers, focus on leverage: negotiate on price, closing costs, repairs, and terms when the data shows demand is soft. Also, be honest about timelines—buyers may have more options, but good homes still move when priced right. Most importantly, communicate clearly and consistently. Uncertainty is high, so the agent who can explain the market simply, using current numbers, becomes the trusted guide.

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