Austin’s K-Shaped Housing Market: Luxury Flies, Entry-Level Stalls

Homes priced over $2 million in Austin closed 35% more sales this spring than they did a year ago, and the ones that sold went under contract a median of 18 days faster. Meanwhile homes under $400,000, which is still the biggest single chunk of the whole market, are selling slower than they were last year. That split has a name. People call it a K-shaped housing market, and the Austin housing market is living in one right now.

So here is where this started for me. A realtor posted on social media a couple weeks back that 78746 was outperforming everything and that million-dollar-plus homes were selling instantly. Big confident take, lots of likes. And instead of arguing about it in the comments (nobody wins that, ever), I did the thing I actually do for a living. I pulled the data. Ninety days of it (yes, this is what I consider a fun Saturday, my wife has questions about me).

Here is the short version. The million-dollar part is true. The 78746 part is not. Let me show you.

Everything below comes from a Neuhaus Realty Group analysis of Austin MLS data, the ACTRIS feed, residential closed sales from April 12 to July 11, 2026, compared against the exact same window in 2025. Same 90 days, one year apart. That is the whole point, we are comparing this spring to last spring, not cherry-picking.

What a K-shaped Austin housing market actually looks like

A K-shaped market is exactly what it sounds like. One line goes up, one line goes down, and they start from the same spot. In real estate that means the top of the price ladder and the bottom of the price ladder are moving in opposite directions at the same time. Not slightly different. Opposite.

Here is every price tier in the metro, side by side.

Read that top row and that bottom row again, because that is the whole story. Homes under $400k took 44 days to sell this year versus 38 last year. That is six days slower. The median price in that tier actually slipped, from $317k down to $310k. So more of them are selling (volume is up 10%), but they are sitting longer and the price is drifting down. That is a tier working harder to get less.

Now the $1M to $2M tier. That is the single fastest-moving slice in the entire metro at 24 median days on market, and volume is up 19% year over year. And $2M and up? Volume jumped 35%, and those sellers went from holding out 58 days to just 40. When the most expensive homes in town start selling 18 days faster, something real is happening, that is not noise.

So both halves of the K are real. The luxury line is going up and to the right. The entry-level line is bending down. The question I actually care about is why, because the why is where you make decisions.

Why the bottom is stuck and the top is flying

This is the part most of the hot takes skip. The mechanism behind a K-shaped housing market is not vibes. It is financing. And this year, for the first time, I can actually show it to you with numbers, because the buyer financing field only started reporting reliably in our 2026 data (more on that in the caveats, I am not going to pretend the older data was cleaner than it was).

Here is how buyers paid, by tier, across roughly 19,000 closings that reported it.

Look at the under-$400k row. Four out of every ten buyers are using an FHA, VA, or USDA loan. Those are the buyers with the thinnest qualification margins, the ones most exposed to interest rates, appraisal gaps, and their own debt-to-income ceiling. When rates tick up, this buyer is the first one to get squeezed out of the room. The bottom of the market is basically a hostage to the rate environment.

Now look at the $2M row. Nearly half of those buyers, 44.2%, paid cash. Cash does not care what the Fed did on Wednesday. A cash buyer is rate-immune, so the top of the market just keeps moving while the bottom waits for a break that has not really come. That is the engine. That is literally the shape of the K, sitting right there in the financing column.

Daniel Kahneman has this idea he calls “what you see is all there is.” Your brain builds a whole story out of the little bit of information right in front of it. A realtor sees a couple of fast luxury sales, and the story writes itself: everything is on fire. But the data you cannot see off the top of your head, the 40% of entry-level buyers stretching to qualify on a government loan, is the part that actually explains the market. The story you can see and the story that is true are two different things here.

The 78746 myth, checked against 90 days of data

Ok so back to the claim that started all this. Is 78746 outperforming everything?

Here is what 78746 actually did over the last 90 days: 93 closed sales, a median price of $1.875 million, a median 27 days on market, and homes selling at 92.7% of their original list price. That is a genuinely strong, healthy luxury zip. Nobody should feel bad about owning there.

But outperforming everything? The metro median days on market for all $1M-plus homes is also 27. Same number. So 78746 is matching the luxury average, not beating it. And on discounting it is actually a hair softer, 92.7% of original list versus 93.9% for metro luxury as a whole. Sellers in 78746 are giving up a little more off their ask than the typical million-dollar seller across town, not less.

You want to know which zips are actually selling fast right now? It is not the one on the billboard. Try these, by median days on market:

• 78739 (Circle C and southwest Austin): 7 days
• 78733 (west Austin, Lake Austin side): 11 days
• 78737 (out toward Dripping Springs): 14 days

Seven days. That is a different universe than 27. If speed is your headline, those are your zips, not 78746.

Now, I am not trying to dunk on the person who posted this, because they were half right and they were pointing at something real. And 78746 does have one genuine edge I will give it credit for: supply is tight. There is about 4.7 months of inventory for million-dollar-plus homes in that zip, versus 7.0 months for metro luxury overall. Fewer options means sellers there hold a little more leverage on availability. That is a real advantage. It is just a different claim than “sells instantly and beats everything,” right? Precision matters when you are about to price a house.

A few honest caveats before you quote me

I would rather you trust these numbers than be dazzled by them, so here is where they are soft. Days on market is MLS days on market, which means if a listing gets pulled and re-listed the clock resets, so some homes have really been sitting longer than the number shows. The $2M-and-up tier is only 233 sales, and when your sample is that small the median gets jumpy, so read that tier as a strong direction rather than a precise gospel figure. And like I said, the financing breakdown is 2026-only, because that field just was not reported cleanly enough before to compare year over year. None of that changes the shape of the K. It just means I am showing you the seams.

What this means if you are buying or selling right now

So what do you actually do with a K-shaped Austin housing market? It depends entirely on which arm of the K your house lives in.

If you are selling under $400k: your buyer is probably financing with an FHA or VA loan and qualifying on a knife’s edge. That means condition matters more than it did two years ago, because those loans have appraisal and inspection standards that a cash buyer would just wave off. Price with a little appraisal headroom so the deal does not blow up at valuation. And be ready to offer a concession toward a rate buydown, because for this buyer, the monthly payment is the entire negotiation. You are not selling a house, you are selling a payment they can qualify for.

If you are selling over $1 million: you are in the strongest position this market has handed sellers in years. Volume is up, homes are moving faster, and a big share of your buyers are paying cash and are not sweating rates. That does not mean you get to be lazy about pricing, but the wind is at your back for the first time in a while.

If you are buying at the very top, over $2 million: do not let the “luxury is on fire” headline scare you into overpaying. That tier is still selling at 91.8% of original list, and there is a full 7.0 months of luxury supply sitting out there across the metro. Seven months is a lot. You have real negotiating room up there, more than the narrative suggests. The story says hurry. The data says you can breathe.

For the record, I have been doing this in the Austin and Hill Country market since 2009, and the thing I keep coming back to is that “the market” is a useless phrase. There is no such thing as the Austin housing market right now. There is the top and there is the bottom, and they are having completely different years. If you want to go deeper on the high end, I broke that down further in our West Austin luxury market breakdown, and if you are wondering whether the whole thing is about to fall over, I looked at that in will Austin’s housing market crash in 2026.

Want a read on your specific zip and price tier?

Averages lie, and a metro-wide number tells you almost nothing about your street. If you want to know which arm of the K your house is actually on, and what that means for pricing or timing, that is exactly the kind of thing I like digging into. Reach out to Ed Neuhaus and lets pull the numbers for your zip and your price band specifically. No pressure, just a straight read on where you stand.

Ed Neuhaus is the Broker and Owner of Neuhaus Realty Group in Bee Cave, Texas, licensed since 2009 (TREC #593057).