Austin, Texas Housing Forecast: ‘Normal’ Gains Through 2018?

July 15, 2017 | By Brandon Cornett | © 2017, | Our copyright policy

A recent forecast for the Austin, Texas real estate market suggests that home prices could rise by a historically “normal” pace of around 3% over the next 12 months. This would follow above-average price gains that occurred over the last couple of years, suggesting that the hot Austin housing market could be cooling down a bit.

Forecast for Austin Housing Market: July 2017 - July 2018

In July 2017, the real estate research team at Zillow updated its forecast for the Austin housing market, extending into the summer of 2018. According to the company’s latest estimate, their economists expect home prices in Austin to rise by 3% over the next 12 months. This prediction was made in July 2017, which means it stretches into the summer of 2018.

If this forecast proves to be accurate, it would signify a slowdown in house-value appreciation. Over the last 12 months, prices in Austin, Texas rose by 7.3%, which is significantly higher than the historical norm for U.S. home prices over the last few decades.

This latest forecast for the Austin real estate market closely resembles the outlook for the nation as a whole. The analysts at Zillow recently predicted that home prices nationwide would rise by around 3.2% over the next year.

According to the national real estate brokerage Redfin, the median sales price in Austin rose to around $380,000 in June 2017.

House values across the country rose by 7.4% over the last year, which is nearly identical to the 7.3% gain that occurred in Austin. So it seems the city’s local real estate market is closely mirroring national trends, at least in terms of year-over-year home price gains.

But there are some aspects of the Austin housing market that set it apart from the nation as a whole. Inventory is one of those factors.

Tight Inventory and Fast-Selling Homes

The supply of homes in the Austin area is still fairly low, with a 2.3-month supply reported in June 2017. Five years ago, Austin had about 5.2 months worth of supply. To put these numbers in context, real estate experts consider a “balanced” housing markets to have about six months of supply. So there is clearly still a shortage of inventory in the Austin real estate market, and this plays a role in the latest forecasts and predictions for rising home values.

Homes appear to be selling quickly in the Austin area, faster than the national average. According to the national real estate brokerage Redfin, homes for sale in the Austin area spent a median of 18 days on the market during June 2017. The national median was 36 days on the market. So homes in the Austin housing markets appear to be selling twice as fast as homes nationwide.

Rising Mortgage Rates Ahead?

The latest forecasts and predictions for Austin’s real estate market suggests that home prices could continue rising through the end of 2017 and well into 2018. As if this were not enough to create a sense of urgency among home buyers, a key industry group recently issued a forecast for rising mortgage rates as well.

The Mortgage Bankers Association updated its finance forecasts in June and predicted a gradual rise in mortgage rates over the coming months. Their analysts predicted that the average rate for a 30-year fixed home loan would rise to 4.4% by the fourth quarter of 2017. Looking beyond that, they predicted that 30-year mortgage rates would rise to around 5% by the middle of 2018.

The message to home buyers is clear: You might want to consider purchasing sooner rather than later, due to the prospect of higher housing costs down the road.

Disclaimer: This article includes forecasts relating to the Austin, Texas real estate market in 2017 and 2018. These projections were provided by third parties not associated with our company. makes no claims or assertions about future housing or economic conditions.