Demand Has Peaked for the Spring
The activity index for cities tells a more cautious story this morning. We had three cities in the green on Friday, and today we are down to one. That is the early signal of seasonal pullback. Closed sales historically peak between June and July, but the demand side, the activity side, peaks in late April through the first week of May, and we are right at that mark now. The 36-month median price comparison is currently down 5.38%, and the median sold price is $440,000, which is 20% below the May 2022 peak of $550,000.
Roughly 93% of all price changes logged in the past week were price decreases. That is the highest reading since the third week of October, when it hit 94%. Some sellers came into April too aggressive on price and are now playing catch-up. The message to anyone with a listing that has not moved is direct: get ahead of the price drop, do not chase the market down. Buyers are still out there, but they are picky and they know they have leverage.
Where the Demand Is Concentrated
The bottom 25th percentile of the market, properties priced at $324,998 and below, is doing the heavy lifting. The activity index in that band is sitting in the high twenties to nearly 30%. As you move past $650,000, the activity index drops to 23%, and above $700,000 it plummets. By the time you get past $1.4 million, every single price band has more than ten months of inventory. Sellers in those upper bands are holding firm on price, with days on market in the seventies, but the demand is simply not there at those numbers.
Five cities are up year over year on median sold price: Bastrop, Burnet, Lago Vista, Smithville, and Wimberley. Wimberley just hit an all-time high. Compare that with Marble Falls, down 39.7% from peak, or Buda, flat year over year and 24% below peak. The City of Austin median is $550,000, down 4.2% year over year and 9.8% from peak, but at the city's compound appreciation rate of 4.9%, peak recovery is only about 24 months out.
Months of Inventory and Market Type
Months of inventory for the metro is 5.71, down 2.2% year over year from 5.84. More than half of the cities we track now have lower months of inventory than they did one year ago. The City of Austin alone is down 16.9% year over year on months of inventory and only 10% above where it was two years ago. That is a meaningful tightening. The metro now sits at 2.8 sellers per buyer, putting the overall classification at balanced. Zero cities are hot, five are warm, sixteen are balanced, eight are cool, and one, Smithville, is cold. On the zip code side, three are hot: 78737, 78739, and 78749.
Market Flow Score and Rate Environment
The Market Flow Score, our composite measure of market momentum, came in at 4.32 for April versus 3.84 last April. That is three months in a row beating last year. We are looking for four consecutive months as the historical recovery signal, and next month we need to clear 4.70 to confirm it. Absorption rate at 19.63% also outperformed last year for the second month in a row. Closed sales for April hit 2,737, up 3.6% year over year, and year-to-date sold is up 2.5%. Sold per 1,000 realtors is up 8.6%, the strongest first-quarter-plus reading we have seen in four years.
Rates climbed back to 6.625% this morning. The bond market is up 4.7 basis points and adjusting to last week's hotter-than-expected inflation print. That matters for buyer urgency conversations and for any seller still believing they have pricing power they no longer have. Inventory is shrinking, demand is outperforming last year, but the rate environment is reminding everyone that the cost of waiting is real. The story is constructive, but the execution still has to be sharp.
