Interest Rate Impact on Austin's Housing Market

fmarquez | Dec. 10, 2022, 10:11 p.m.

Interest rates increased almost 500 points since the beginning of the year, and we're begining to notice changes in the Austin home market. What exactly is happening? In this post I'll dive into the ways the interest rates are impacting the market.

Effect on New Listings

Volume of listings

While the number of new listings appears to be decreasing, and interest rates continue to increase, the average asking price remains stable. It might be too early to see a decrease in asking prices (if we ever observe one).

Asking Price Changes

By looking at asking prices on new listings alone it's hard to know interest rates spiked this week. Since prices remain stable, I looked at price changes as a percentage of first asking price. As shown in the graph below, it is clear listings began adjusting prices at some point in August.

Comparing the graph above with the one below we can see a correlation between price adjustments and interest rate changes.

We graphs above hint a correlation between high interest rates and listing price adjustments. Most areas have a clear relation as shown in the plot below. Downtown seems to the immune to interest rates. I would speculate that at a price range of over $2M, and the fact that these listings are luxury properties, sellers are not expecting to sell within a few weeks like the average home, and a result of that it is too soon to decrease the asking price. This of course is a Downtown specific property, the rest of the Austin neighborhood, no matter the price range do show a correlation between rate and price adjustments.