Ed Neuhaus 
The numbers do not lie. Dripping Springs home prices dropped 12.7% year-over-year as of December 2025, with the median sale price hitting $480K according to Redfin. At the same time, 8,000 new residential lots have been permitted across the city and its extraterritorial jurisdiction. That is not a typo. Eight thousand potential homes coming into one of the fastest growing communities in Central Texas.
So what does this mean if you are thinking about buying or selling in Dripping Springs right now. Let me walk you through what is actually happening in this market and where I think this is headed.
The Headline Numbers for January 2026
Let me start with the data. As of mid-January 2026, Dripping Springs had 221 listed properties with a median list price of $665,000, down 3.48% month-over-month. Homes are sitting an average of 113 days on market.
But that is the list price. The sale price tells a different story. Multiple sources show prices down anywhere from 4.7% to 12.7% year-over-year depending on which dataset you look at. Orchard reports a median of $686,000 in recent sales, down 4.7%. Zillow shows typical home values at $763,164, down 9.8% over the past year.
The median sale-to-list ratio is sitting at 92.13%, down 4.6 points from last year. Translation: buyers are negotiating harder and sellers are coming off their numbers. Zero percent of homes sold above list price in December 2025.
Days on market have actually improved compared to last year. Homes are selling after 66-67 days now versus 91 days last year. But do not let that fool you. The reduction in days on market is not because of strong buyer demand. It is because sellers are finally pricing more realistically after sitting for months at inflated numbers.
Price per square foot is down too. Redfin shows $217 per square foot, down 4.8% year-over-year. Orchard reports $269 per square foot, down 3.2%. The range depends on which segment of the market you are measuring, but the direction is clear.
The New Construction Tsunami
Here is the big story that most people are missing. Up to 8,000 new homes have been permitted in Dripping Springs and the surrounding extraterritorial jurisdiction. That is not all going to hit the market tomorrow, but it is coming.
Some of the major developments already underway or launching in 2026:
- Wild Ridge: Over 900 homes planned, adjacent to Big Sky Ranch
- Double L Ranch: 1,600 acres with over 2,200 homes planned, located near Ranch Road 12
- Headwaters: 1,000 permitted residential lots off Highway 290, with builders including David Weekley, Dream Finders, Drees, and Taylor Morrison
- Estates at Sawyer Ranch: 73 homes permitted
- The Ranches at Caliterra: Expansion with Drees, David Weekley, and Scott Felder Homes, availability expected in 2026
Construction is already underway on several of these communities according to reports from local realtors, and homes are expected to be available throughout 2026.
So what happens when you add thousands of brand new homes to a market where prices are already down 10-13% year-over-year. That is the question every existing homeowner and potential buyer should be asking.
How New Construction is Affecting Resale Values
New construction puts pressure on resale values in two ways. First, it gives buyers more options. When someone can choose between a 5-year-old home with someone else’s design choices or a brand new home where they pick everything, the resale home has to compete on price.
Second, builders are being aggressive with incentives right now. They are holding sticker prices but offering significant credits and rate buydowns. According to multiple sources tracking the Texas new construction market in 2026, builders are buying down mortgage rates, offering design center allowances, and providing closing cost credits to move inventory.
Common incentives include 2-1 buydowns where the interest rate is reduced by 2% in the first year and 1% in the second year. Some builders are offering permanent rate reductions if you use their preferred lender. Design center credits of $20K, $30K, even $50K or more are not uncommon on higher-priced homes.
If you are an existing homeowner trying to sell a 3-year-old house at $750K, and the builder down the road is offering a brand new house at $775K with $40K in upgrades included and a 2-1 rate buydown, you have a problem. Your effective competition is not $775K. It is closer to $675K after you account for the value of those incentives.
This is why days on market for existing homes were up 4.62% year-over-year in December 2024, and why the sale-to-list ratio has dropped over 4 points. Sellers are competing with builders who have deeper pockets and more flexibility than individual homeowners.
Which Neighborhoods Are Holding Value
Not all Dripping Springs neighborhoods are performing the same. Let me break down what I am seeing.
Belterra has been hit particularly hard. The median sale price was $629K last month, down 14.9% year-over-year according to Redfin. Price per square foot is $233, down 7.9%. Belterra is a mature master-planned community with good amenities, but it is feeling the pressure from newer developments with more modern finishes and floorplans.
Caliterra is holding up better than Belterra but still seeing softness. Homes in Caliterra range from the $500Ks to over $2 million depending on the section. The Ranches at Caliterra expansion launching in 2026 will add more inventory, which could put additional pressure on resale values in the community.
Headwaters is one of the newer master-planned communities and has the advantage of being fresh inventory with desirable builders. But even here, builders are offering incentives to compete.
The pattern I am seeing is this: established neighborhoods with 5-10 year old homes are getting squeezed the hardest. Brand new communities are holding price better because of builder incentives, and luxury custom homes on larger lots are more insulated because they appeal to a different buyer who is less payment-sensitive.
If you own a spec-builder home from 2018-2021 in the $600K-$900K range, you are in the toughest spot right now. That is the segment with the most competition from new construction.
Where Buyers Are Coming From
Dripping Springs has been discovered by people all over America in the last few years. The draw is the small-town feel, proximity to Austin, and highly rated schools. During the pandemic, families researching Texas on message boards kept seeing Dripping Springs mentioned.
According to broader Texas migration data for 2026, residents from expensive states like California, New York, and the Northeast continue moving to Texas. U-Haul’s 2025 Growth Index shows Texas leading in-migration, with the fundamentals remaining intact: relative affordability, job opportunities, tax advantages, and lifestyle upgrades.
In my experience working with buyers moving to Dripping Springs, I see three main groups:
- Austin professionals who work remotely or hybrid and want more space and better schools without commuting daily
- Out-of-state relocators from California, the Northeast, and other high-cost areas who are trading a $1.2 million townhouse for a $700K home on an acre
- Move-up buyers from other parts of the Austin metro who are cashing out equity and upgrading to Dripping Springs for the schools and lifestyle
What these buyers are looking for: good schools, land, modern finishes, and access to Austin without living in the city. Remote work made Dripping Springs viable for people who would have never considered a 45-minute commute five years ago.
Is This a Buying Opportunity or a Falling Knife
Ok, so prices are down 10-13% year-over-year and 8,000 new homes are coming. Should you buy now or wait. Let me give you my take.
If you are a buyer, this is the best environment we have seen in Dripping Springs in three years. Inventory is up, sellers are negotiating, and you have leverage. The panic buying of 2021-2022 is long gone. Multiple offers are rare. You can take your time, do your inspections, and negotiate repairs.
But I would not call this a screaming deal yet. Prices are down from the peak, but they are not down to 2019 levels. A home that sold for $550K in 2019, hit $750K in 2022, and is now $680K is still up 24% from five years ago. It is just not up 36% anymore.
The risk of buying now is that we are not done correcting. With 8,000 new homes permitted and builders aggressively competing, there is more downward pressure ahead. If you buy today at $680K and that same home is worth $620K in 18 months because of new inventory flooding the market, you are going to be frustrated.
The opportunity of buying now is that mortgage rates could drop further into 2026. Some analysts are projecting rates could reach 5% to 5.5% by mid-2026 according to the Texas housing outlook. If rates drop and prices have already corrected 10-13%, we could see demand pick back up before those 8,000 new homes are all built out.
Here is the key question: are you buying because you need a place to live and plan to be there 5-7 years, or are you buying because you think this is the bottom and you are timing the market. If it is the former, I think you can find good value right now with proper negotiation. If it is the latter, I would wait.
Advice for Buyers Right Now
If you are buying in Dripping Springs in early 2026, here is what I would focus on:
1. Compare resale homes to new construction. Do not just look at list price. Factor in the value of builder incentives. A $750K new construction home with a 2-1 buydown and $30K in design credits is really competing at $680K-$700K effective price. Make sure the resale home you are considering is priced accordingly.
2. Negotiate hard. Sellers are motivated right now. The sale-to-list ratio of 92.13% tells you that buyers are getting 7-8% off list price on average. Do not be afraid to make a lower offer, especially if the home has been sitting 60+ days.
3. Focus on location within Dripping Springs. Not all parts of town will be equally affected by the new construction wave. If you buy in an established neighborhood with good amenities and low HOA turnover, you will be more insulated than if you buy in a newer subdivision that is about to have three more phases built next door.
4. Consider new construction with incentives. I know this sounds counterintuitive after I just said new construction is pressuring resale values, but if you are going to buy anyway, getting a 2-1 buydown and $40K in upgrades might be a better deal than buying a 3-year-old home at a “discount” that is really not much of a discount once you account for what the builder is offering.
5. Think long term. Dripping Springs is still growing. The schools are still excellent. The location is still 30 minutes from downtown Austin. If you are buying for the next 7-10 years, short-term price volatility matters less than getting into the right community at a reasonable price. Have questions about which neighborhoods make the most sense for your situation. Reach out to me and let me walk you through what I am seeing on the ground.
Advice for Sellers Right Now
If you are selling in Dripping Springs, I am going to be blunt. This is not 2022. You need to price aggressively from day one.
The market is telling you what homes are worth. Median sale prices are down 10-13% year-over-year. The sale-to-list ratio is 92%. Homes are sitting 66-113 days on market depending on which data you look at. If you price at 2022 levels, you are going to sit. And every week you sit, your home gets stale and buyers wonder what is wrong with it.
Here is what I would do if I were selling right now:
1. Price 5-7% below what you think it is worth. I know that hurts to hear. But if you price it right, you will get activity in the first two weeks. If you price it too high, you will sit for 90 days and end up taking the same offer you could have gotten on day 10, except now you have lost three months and you look desperate.
2. Make it show like a model home. You are competing with brand new construction that has never been lived in. Your home needs to be spotless, decluttered, and staged. If buyers walk into your house and then walk into a new build down the street, your house better feel newer and cleaner, or they are going with the new build.
3. Offer to buy down the buyer’s rate or contribute to closing costs. This is what builders are doing. If you can offer $10K-$15K in closing cost credits or a 1-0 rate buydown, you are leveling the playing field with new construction. Yes, it costs you money upfront, but it is better than sitting on the market for four months and dropping your price $30K.
4. Be ready to negotiate. The first offer you get might be 7-10% below your list price. Do not get offended. That is the market. Counter at a number that makes sense, but understand that buyers have leverage right now and they know it.
5. Do not wait for spring. A lot of sellers are thinking they will wait until March or April when the market “picks up.” But guess what else is happening in spring. More new construction inventory is hitting the market. Waiting does not improve your position. If you need to sell, do it now while there is still some activity.
Want a realistic assessment of what your home is worth in today’s market. Call me and I will pull comps and show you exactly where you need to be priced to move.
My 12-Month Outlook
Here is where I think this market is going over the next year.
First half of 2026: Continued softness in resale values as new construction ramps up. Prices likely drift down another 3-5% in the $600K-$900K segment as more new inventory hits and builders stay aggressive with incentives. Luxury homes over $1.2 million and homes on large lots will be more stable.
Second half of 2026: If mortgage rates drop to 5-5.5% as some are forecasting, we could see demand pick back up. But it depends on how much new inventory actually closes and hits the resale market. If a significant number of those 8,000 permitted lots get built and occupied in 2026-2027, the market will stay soft longer.
The wildcard is the broader economy. If we see a recession or job losses in Austin’s tech sector, this market could get worse before it gets better. If the economy stays strong and rates drop, Dripping Springs could stabilize by late 2026.
My best guess: we are somewhere in the middle of this correction, not at the bottom yet. Buyers who are patient and strategic will find good opportunities over the next 6-9 months. Sellers who are realistic about pricing and aggressive about positioning their homes will still be able to move, but it will not be easy.
One thing I know for sure. The next 12 months in Dripping Springs will look very different from the last 12 months. And the agents who understand what is actually happening with new construction and inventory will serve their clients a lot better than the ones still talking about 2022 pricing.
Bottom Line
Dripping Springs is facing a supply tsunami at the same time demand has softened. Prices are down 10-13% from the peak, and they have further to fall in my opinion, especially in the move-up buyer segment where new construction is hitting hardest.
But this is still a great place to live. The schools are excellent. The community is growing thoughtfully. And if you get in at the right price, you will be fine long term. Just do not expect appreciation in the next 18-24 months. This is about lifestyle and long-term value, not flipping in three years.
If you want to talk through your specific situation, whether you are buying, selling, or just watching, reach out to me directly. I have been working this market long enough to know when to be optimistic and when to be realistic. Right now, it is time to be realistic.
And if you are trying to decide between Dripping Springs and other Hill Country markets like Bee Cave or Lakeway, I wrote a full breakdown of how these markets compare. The dynamics are different in each area, and it is worth understanding before you commit.
