Market Report · May 2026
The broader Austin market is softer than it was three years ago. The luxury market is not. While the overall median sale price has declined and days on market have stretched, the $1.5M+ segment is telling a meaningfully different story — one that buyers, sellers, and developers in 78704, Westlake, Tarrytown, and Rollingwood should understand clearly before they make their next move.
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| $1,450,000 Travis County Luxury Median Q1 2026 — homes $1M+ | $512 Avg Luxury Price / SF Austin $1M+ segment, 2025 full year | 54 days Luxury Median DOM Austin luxury, Q1 2026 | +3.8% Luxury YOY Price Growth vs. -2.2% for overall Austin market |
Austin's overall housing market has been navigating a correction from its 2021–2022 peak. The citywide median sale price came in at $530,000 in March 2026 — down 2.2% year over year. Price per square foot across the full Austin market sits at approximately $290–$308, off more than 8% from a year ago. Inventory has expanded to over five months of supply, pushing the market toward balanced conditions for the first time in years.
The luxury segment — homes priced at $1.5M and above, and particularly the $2M+ tier where The Davis Agency operates — has absorbed this correction differently. Austin generated $4.6 billion in homes sold at $1M or above in 2025. That is over 2,700 transactions at an average of $512 per square foot. The luxury segment has grown in volume while the broader market softened — a divergence that reflects the structural differences in buyer profiles, motivation, and market access at the upper tier.
Understanding why the luxury market is behaving differently — and what that means for your specific situation — is what this report is for.
The Luxury Divergence: Why Upper-End Is Outperforming
The correction in the broader Austin market is being driven primarily by rate sensitivity. Buyers in the $400K–$800K range who need financing are the most affected by elevated mortgage rates — their purchasing power compresses directly as rates rise, which reduces demand and applies downward pressure on prices. The luxury market at $2M+ operates with meaningfully less rate sensitivity for two reasons.
First, the cash buyer percentage is dramatically higher at the luxury tier. Cash transactions — which are entirely immune to rate fluctuation — represent a much larger share of $2M+ closings than they do in the general market. Buyers with liquid assets from equity, business sales, or corporate relocation packages are not choosing between buying and renting based on the 30-year fixed rate. Second, the buyers who do finance at the luxury level are generally qualifying on the same fundamentals regardless of whether the rate is 6.5% or 7.5% — the monthly payment differential on a $2M home is meaningful but not disqualifying for a buyer at that income level.
The result is a luxury market that is more insulated from rate cycles than the media coverage of the Austin housing market suggests — and one that is continuing to perform at levels that support sellers' and developers' planning assumptions for 2026.
The Key Distinction
The Austin market story you are reading in the headlines is accurate for the $400K–$900K segment. It is not an accurate description of the $1.5M–$4M market where The Davis Agency operates. These are different products with different buyer profiles behaving in meaningfully different ways. Read the submarket data, not the citywide headline.
78704 — Barton Hills, Zilker, Travis Heights
The 78704 submarket — where The Davis Agency focuses the majority of its activity — is showing the characteristics of a healthy, normalized luxury market rather than a distressed one. Here is what the current data shows.
The Barton Hills market is currently running a trailing-12-month median sold price of approximately $1.4M, with 26 active listings and 53 closed transactions over the past year. Recent closed comps in the neighborhood illustrate the range clearly: a 4-bed, 4.5-bath new construction on Oakhaven Drive sold at $3,150,000 ($721/SF) after 112 days on market, while a renovated 1962 home on Rock Terrace closed at $1,849,000 ($734/SF) in just 51 days. The velocity difference between those two transactions tells you something important: well-positioned product at the right price point is still moving quickly, while overpriced or poorly positioned listings are absorbing the expanded DOM averages.
New construction in 78704 — the product The Davis Agency tracks most closely — continues to exit at $2.5M–$4M for best-in-class builds in Barton Hills. Land values remain in the $82–$95/SF range for well-positioned teardown lots, which sustains the developer economics that have driven the infill cycle here for the past decade. The new build pipeline is active and the exit pricing supports continued acquisition at current land prices.
The list-to-close rate across Austin luxury is running at 95% — meaning sellers are netting approximately 95 cents on the dollar relative to their list price. For context, that figure was effectively 100%+ during the peak years of 2021–2022 when overbids were routine. The current environment is more balanced, which means sellers need to price accurately from day one rather than relying on competitive bidding to close the gap on an aggressive list price.
Westlake and Rollingwood — The School District Premium Holds
The Westlake and Rollingwood market — 78746 and the surrounding West Lake Hills municipality — continues to benefit from the durability of the Eanes ISD premium. The school district quality factor that drives demand in this submarket does not correlate with interest rate cycles the way entry-level market demand does, which gives these neighborhoods a form of insulation similar to what the upper 78704 tier enjoys.
Current market data from Q1–Q2 2026 shows Rollingwood trading at a median of $2.3M–$2.9M with approximately $709/SF on closed transactions and 65 days median time on market. The supply picture in Rollingwood is uniquely constrained — active inventory often sits at fewer than five listings simultaneously, which means any well-priced new listing generates disproportionate buyer attention and, in some cases, multiple-offer situations. This is not a market with room for aggressive overpricing, but it is one where a realistic list price moves quickly.
West Lake Hills broadly is running 60–120 days on market for the $2M–$5M tier, with the tighter end of that range applying to properties priced accurately for their condition and position. Ultra-luxury above $5M is transacting more slowly — 90–180 days — which is standard nationally for that tier and does not indicate distress. The $1.5M–$2.5M segment in the Westlake corridor is showing 2–4% appreciation for 2026 based on current trajectory, driven by a growing pool of trade-up buyers who have built equity from the peak years and are now ready to move.
Tarrytown — Supply Exhaustion Driving Premium Returns
Tarrytown (78703) continues to be one of the strongest appreciation stories in Austin luxury. The neighborhood's combination of virtually no buildable land, irreplaceable location between downtown and Lake Austin, and a concentrated renovation cycle that is lifting values block by block has created the conditions for 4–6% expected appreciation in 2026 — the highest projected rate of any established luxury submarket in Austin.
Price per square foot for new construction and high-quality renovation in Tarrytown is running $520+, competitive with the top of the 78704 range. The buyer who understands Tarrytown is paying a location and scarcity premium, not a quality premium over comparable product in Barton Hills — both submarkets are producing quality luxury product, and the location differential between them is a matter of preference rather than a clear hierarchy.
| Submarket | Median Sale Price | Price / SF | Median DOM | 2026 Trend |
|---|---|---|---|---|
| Barton Hills (78704) | ~$1.4M | $700–$750 (resale) $900–$1,100 (new build) |
50–70 days | Stable — builder demand sustained |
| Zilker (78704) | $1.3M–$2.2M | $700–$900 (all product) | 45–65 days | Active — new construction liquid |
| Travis Heights (78704) | $1.1M–$1.9M | $600–$800 | 55–80 days | Emerging — best value entry in 78704 |
| Rollingwood | $2.3M–$2.9M | ~$709 | 65 days | Supply-constrained — moves fast when priced right |
| Westlake Hills | $1.8M–$4M+ | $500–$700 | 60–120 days | +2–4% appreciation trajectory |
| Tarrytown (78703) | $1.5M–$3.5M | $520+ (new/renovated) | 40–75 days | +4–6% projected — highest in Austin luxury |
Sources: Austin Board of Realtors MLS data, Q1 2026. Travis County luxury reports. The Davis Agency transaction data. Figures represent actively traded market segments — individual transaction results vary.
What Is Driving Demand in H2 2026
Corporate relocation activity. Austin continues to attract Fortune 500 expansions and tech industry presence, and each new office opening or expansion brings a wave of executive housing demand. Relocating executives in the $200K–$500K income range — the buyer profile that lands in 78704, Westlake, and Tarrytown — are purchasing on corporate timelines that do not respond to rate cycles. They are moving because their job moved, not because financing conditions are optimal.
Equity-driven trade-ups. Buyers who purchased in Austin at 2018–2020 prices — or who received equity from 2021–2022 sales — are now the most active segment of the $1.5M–$2.5M buyer pool. They are trading up from properties they own outright or nearly so, which reduces their sensitivity to current financing rates and puts them in a position to transact with confidence.
New construction momentum in 78704. The infill development cycle in Barton Hills and Zilker is continuing at a pace that signals builder confidence in exit pricing. Builders do not acquire $1M+ lots and start 14-month projects in submarkets where they are uncertain about demand. The continued acquisition activity in 78704 is a real-time vote of confidence in the market that does not show up in backward-looking price data.
Inventory normalization. After the extreme undersupply of 2021–2022, inventory levels across Austin luxury have normalized to a more sustainable range. This means buyers have more choices than they did during the peak years — but it does not mean the market is oversupplied. Austin's luxury submarket inventory is not growing to levels that would produce meaningful downward price pressure. It is growing to levels that allow qualified buyers to make considered decisions, which is healthy for the long-term stability of the market.
What does the current market mean for your specific situation?
Whether you are considering selling, evaluating a purchase, or planning a development in 78704 or the broader Austin luxury market — the aggregate numbers only tell part of the story. The block-level, product-specific analysis is what actually informs a good decision. That is the conversation The Davis Agency has with every client.
Talk to Derrik →What the Current Market Means for Sellers
The current Austin luxury market rewards realistic pricing and penalizes aspirational pricing in a way the 2021–2022 market did not. The list-to-close ratio running at 95% tells you that the market is transacting — but the 26-day spread between median and average days on market tells you that overpriced listings are sitting and creating a drag on sellers who price accurately from the start.
Price accurately at launch. The data is clear: homes that are priced correctly for their condition, location, and the current comp set sell in the median timeframe (50–70 days in 78704, 65 days in Rollingwood). Homes that launch at an aspirational price requiring 2–3 reductions before transacting are accumulating DOM that signals distress to buyers and ultimately net less than a realistic launch price would have produced.
Pre-sale preparation matters more than it did. During the peak years, buyers tolerated deferred maintenance and unfinished projects because inventory was so scarce. Today's buyer has options and uses them. The sellers netting the highest prices in 78704 right now are the ones who have addressed the condition items that would otherwise give a buyer negotiating leverage — fresh paint, updated fixtures, clean landscaping, and functional systems throughout.
The off-market channel is more valuable today than at peak. During a competitive market, a motivated buyer will fight for almost any listed property regardless of the sales process. In today's more normalized market, off-market access gives sellers a direct path to the most motivated, pre-qualified buyers — eliminating the DOM accumulation risk that comes with a public listing that does not find its buyer in the first 30 days.
What the Current Market Means for Buyers
The buyers who are best positioned in this market are the ones who understand that the negotiating environment has genuinely shifted — but who are not misreading that shift as a signal to wait for further declines.
Negotiating leverage is real and should be used. Seller concessions toward closing costs, rate buydowns, and inspection repairs are available in most $2M+ transactions in ways they were not at peak. Buyers who are working with experienced agents who understand where the leverage points are in the current environment are netting meaningfully better outcomes than buyers who are not.
The best-priced listings are not sitting. The 50–70 day median DOM in 78704 masks a wide range. Well-positioned, accurately priced new construction and resale in Barton Hills and Zilker is still moving in under 60 days. Buyers who are waiting for further price declines before engaging with a property they want to own are at risk of waiting themselves out of the opportunity.
Off-market access is a competitive advantage. The buyers who are seeing the best inventory in 78704 right now are not finding it on Zillow. They are in conversations with agents who maintain active builder relationships and know what is coming before it hits the public market. In a normalized market where the best product still moves quickly, that information advantage is what separates buyers who close on what they want from buyers who keep getting to properties a week too late.
Derrik's H2 2026 Read
The Austin luxury market is not in a correction — it is in a normalization. The frenzied conditions of 2021–2022 were the anomaly. What we are experiencing now is a market that functions the way healthy markets are supposed to: with real negotiation, real due diligence, and real timelines. For sellers who price correctly and for buyers who are ready to move when the right property surfaces, this is a better environment than the peak years. The noise in the headline data is about the wrong part of the market. The luxury submarket fundamentals are solid.
Frequently Asked Questions
Is now a good time to sell a luxury home in Austin?
For well-positioned properties in supply-constrained submarkets — Barton Hills, Zilker, Tarrytown, Rollingwood — yes. The key qualifier is pricing. Sellers who launch at a realistic price based on current comps are transacting successfully and netting 94–96% of list price. Sellers who launch above market are accumulating DOM that ultimately costs them more than a realistic launch price would have. The current market rewards preparation and accurate pricing, not patience and optimism.
Are luxury home prices in Austin still declining?
At the luxury tier ($1.5M+), prices are broadly flat to modestly positive year over year — not declining. The declining price figures in the media refer to the overall Austin market median, which includes significant volume below $800K. The Travis County luxury median was up 3.8% year over year as of the most recent quarterly data, and the $1.5M–$2.5M segment is on a 2–4% appreciation trajectory for 2026. These are not the same market as the headline numbers describe.
How long is it taking to sell a luxury home in Austin right now?
The median days on market for Austin luxury (defined as $1M+) was 54 days in Q1 2026. In 78704 specifically, well-priced properties are moving in 45–70 days. The average is pulled significantly higher by overpriced listings that eventually transact after multiple reductions — the distinction between median and average DOM is meaningful and sellers should focus on the median figure for comparably positioned product.
What is the outlook for 78704 specifically in H2 2026?
The fundamentals that drive the 78704 market — supply exhaustion, active builder demand, persistent lifestyle amenity appeal, and a deep national buyer pool — have not changed. New construction exit pricing at $2.5M–$4M continues to support land values, which in turn sustains the infill development cycle. We expect continued stability in 78704 pricing through the end of 2026, with the best-positioned new construction continuing to transact at or near asking price.
Where is the best value in Austin luxury right now?
Relative to the premium submarkets, Travis Heights in 78704 offers the strongest value proposition — lower entry prices than Barton Hills or Zilker with comparable lifestyle access. For buyers who are willing to accept smaller lot sizes and less Greenbelt proximity in exchange for South Congress walkability and a lower total dollar commitment, Travis Heights is where the current market offers the most upside. In the Westlake corridor, Rollingwood's extreme supply constraint and more accessible entry point relative to West Lake Hills proper makes it worth close attention for buyers in the $2.3M–$3M range.
Related Reading from The Davis Agency
→ The 78704 Land Value Report: What Infill Lots Are Actually Worth in 2026
→ Barton Hills vs. Westlake: Where Does $2M Go Further in Austin in 2026?
→ Zilker vs. Barton Hills vs. Bouldin Creek: The 78704 Neighborhood Breakdown
→ The Off-Market Advantage: How The Davis Agency Closes Deals Before They Hit MLS
→ Should I Sell My Austin Home Now or Wait for Rates to Drop?
Get a Current Valuation for Your Austin Luxury Property
Market reports tell you where the averages are. A property-specific valuation tells you where your home fits within them — and what pricing and timing strategy gives you the best outcome in the current market. The Davis Agency provides current valuations for 78704 and greater Austin luxury properties at no cost and no obligation.
Request a Current Valuation Call (512) 608-8811
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Derrik Davis · Broker/Owner, The Davis Agency · CLHMS Certified · TREC License #558841 · Serving 78704 and the greater Austin luxury market since 2006.
