Get Off the Fence: Why Late 2026 Favors East Austin Homebuyers
If you have been waiting for the right moment to buy a home in East Austin, the conditions most buyers say they want are here right now: plenty of homes to choose from, fewer buyers competing for them, sellers willing to negotiate, and a set of homeowner tax breaks that took effect this year.
The short answer
Late 2026 is a strong time to buy in East Austin if your budget works at today's rates. East Austin homes took a median of 63 days to sell in September, Austin had 5.4 months of inventory, and buyers are negotiating concessions. The One Big Beautiful Bill Act also raised the SALT deduction cap to $40,400 for 2026, which lets many Travis County homeowners deduct their full property tax bill if they itemize.
Mortgage rates are higher than anyone would like. We will address that directly. But rates are only one part of the decision, and the other parts point toward buying in the last quarter of 2026 instead of waiting to see what 2027 brings.
Austin Buyers Hold the Leverage
The September 2026 numbers from Unlock MLS describe a market where buyers set the pace. In the City of Austin, there were 4,502 active listings and 5.4 months of inventory. Six months is the usual line for a buyer's market, so Austin is sitting right at the edge of it.
Source: Unlock MLS, September 2026 Central Texas Housing Report.
Demand has softened. Closed sales in the city fell 12.7% from a year earlier, and pending sales were down 8.6%. The average close-to-list price ratio was 92.5%, so homes are closing below their list prices on average. That gap is your negotiating room.
Prices have not collapsed, and we would not tell you to wait for them to. The City of Austin median sale price was $570,958 in September, up 4.2% from a year earlier, while the metro median rose just 1.4%. What has changed is who controls the terms of the deal. Today that is the buyer.
What that leverage looks like at the table
- Seller-paid concessions you can put toward closing costs or a rate buydown
- Repairs negotiated after inspection instead of waived to win a bidding war
- Time to compare homes and make a decision without a weekend deadline
- Room to ask for a price that reflects the home's days on market
The Rate Reality
Freddie Mac's 30-year fixed average was 7.40% for the week of October 15, unchanged from the week before and up from 6.27% a year earlier. It had climbed for seven straight weeks before leveling off. That raises monthly payments, and it is the main reason many buyers have stepped back.
That retreat is also what created today's leverage. When rates were lower, buyers competed for the same homes and gave up concessions to win. With fewer buyers in the market, sellers are more willing to help pay down your rate or cover closing costs. A seller-funded buydown can lower your payment in a way that waiting for rates to fall cannot guarantee.
A note on refinancing
If rates fall after you buy, refinancing may lower your payment. That is a possibility, not a promise. Buy a home whose payment works at today's rate, and treat any future refinance as a bonus.
Make the Seller Help Pay for Your Rate
In a market where homes sit 60 days or more, the most useful thing to ask a seller for is often not a lower price. It is a credit at closing that buys down your interest rate. We cover the mechanics in our posts on temporary and permanent rate buydowns and seller and lender incentives. Here is how we put it to work for buyers right now.
Why a credit can beat a price cut
A price cut lowers the loan amount a little. The same dollars spent on discount points lower the rate on the whole loan. Here is an example on a $500,000 home with 10% down at a 7.40% rate.
| Seller gives $10,000 as | Result | Monthly P&I |
|---|---|---|
| No concession | $450,000 loan at 7.40% | $3,116 |
| Price cut | $441,000 loan at 7.40% | $3,053 (−$62) |
| Discount points | $450,000 loan at about 6.85% | $2,949 (−$167) |
Illustration only. Assumes $10,000 buys about 2.2 points and each point lowers the rate by 0.25%. What a point buys changes by lender and by day, so get a written quote from your lender before you negotiate.
The strategy: seller credit plus your own points
- Ask the seller for a closing credit written into the contract as a concession toward your closing costs, including discount points.
- Put it toward permanent points if you plan to stay. A temporary 2-1 buydown lowers the payment only for the first two years, and its cost is not treated as points for tax purposes.
- Add points from your own funds if the seller credit does not get the rate where you want it. Those points may also be deductible.
- Check the breakeven. Divide the cost of the points by the monthly savings. If you expect to sell or refinance before then, buy fewer points.
When points can be deductible
The IRS generally lets you deduct points in the year you pay them on a loan to buy your main home, if you itemize and the points meet its tests. Closing before December 31 puts that deduction on your 2026 return.
The seller pays for your points. You may get the deduction.
The IRS treats points a seller pays on your purchase loan as if you paid them yourself. If you itemize and meet the IRS tests, you can deduct them in the year you buy, even though the seller covered the cost. Seller-paid points also count toward the IRS rule that you bring funds to closing at least equal to the points charged.
Example: On a $450,000 loan, the seller credits $9,000 to buy 2 discount points.
You may deduct the $9,000 on your 2026 return if you itemize. Your cost basis in the home goes down by $9,000.
The trade-off: you subtract seller-paid points from your purchase price, which can increase your taxable gain when you sell. This applies to a loan on your main home only. The points must be shown as points on your settlement statement. Source: IRS Publication 936.
The limits
- Seller contribution caps. On a conventional loan for a primary home, Fannie Mae caps seller-paid financing concessions at 3% of the price with less than 10% down, 6% with 10% to just under 25% down, and 9% with 25% or more down. Investment properties are capped at 2%. FHA and VA loans have their own caps.
- No cash back. Seller credits can only cover your closing costs and prepaids. A credit larger than those costs is lost or reduces the price on the loan, and money paid outside closing can make the loan ineligible.
- The appraisal still has to support the price. A seller cannot add the credit to the price beyond what the home appraises for.
- Deductions only help if you itemize. In 2026 your itemized deductions must exceed $16,100 single or $32,200 married filing jointly before points save you anything.
- IRS tests apply to points. The loan must be secured by your main home, the points must be computed as a percentage of the loan, be customary for the area, appear as points on the settlement statement, and your own funds at closing plus any seller-paid points must at least equal the points charged. Funds borrowed from your lender don't count.
- Seller-paid points reduce your basis. You subtract them from your purchase price, which can raise your taxable gain when you sell.
- Loan size and refinances. Interest and points are deductible only on up to $750,000 of mortgage debt. Points on a refinance or a second home are deducted over the life of the loan, not all at once.
- Lender fees are not points. Origination charges for appraisal, title or other services don't count, even if they are labeled as points.
Confirm the numbers with your lender and your CPA before you sign.
Homeowner Tax Breaks From the One Big Beautiful Bill Act
The One Big Beautiful Bill Act, signed in July 2025, changed several deductions that matter to homeowners. Most of them reward owning a home in 2026, and some have expiration dates.
A higher SALT cap, which matters in Texas
The cap on state and local tax deductions rose to $40,400 for 2026, up from $10,000. It increases 1% a year through 2029, then returns to $10,000 in 2030 unless Congress acts. Texas has no state income tax, so for most Austin homeowners the SALT deduction is their property tax bill. Under the old $10,000 cap, many Austin owners could not deduct their full property taxes. The new cap lets many of them deduct the full amount if they itemize.
The higher cap phases down for households with modified adjusted gross income above $505,000, by 30% of the amount over that threshold, but never below $10,000.
Mortgage interest stays deductible
The deduction for interest on up to $750,000 of mortgage debt is now permanent. Before the bill, that limit was scheduled to return to $1 million after 2025. Making it permanent gives buyers a fixed rule to plan around.
Mortgage insurance is deductible again
Starting with 2026, mortgage insurance premiums are again treated as deductible mortgage interest. The full deduction is available with adjusted gross income of $100,000 or less. It shrinks by 10% for each $1,000 above that and is gone above $109,000 ($50,000 and $54,500 for married filing separately). This helps buyers who put less than 20% down.
The standard deduction is the bar to clear
These deductions only help if you itemize. For 2026 the standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly. Property taxes, mortgage interest, and mortgage insurance together often push Austin homeowners past that line in their first year of ownership.
Why closing before December 31 matters
- Points you pay to buy down your rate at purchase are generally deductible in the year you pay them.
- Your share of 2026 property taxes, paid by December 31, counts toward this year's deduction.
- The residential energy credits for solar and efficiency upgrades expired at the end of 2025, so do not count on them when budgeting for improvements.
What Could Change If the House Flips
The midterm elections are on November 3. Republicans hold a narrow majority in the House, and analysts see a Democratic takeover as within reach. Here is what that would and would not mean for buyers.
The tax provisions above are already law
A change in House control does not repeal anything on its own. Changing tax law requires both chambers and the president. If you buy and own in 2026, the 2026 rules apply to you.
Extending those breaks may get harder
The higher SALT cap runs only through 2029. With a divided Congress, new tax legislation of any kind is harder to pass, so an extension of the expanded cap past 2029 would need a deal between the parties. The sooner you buy, the more years of the higher cap you get to use.
Housing finance rules could shift
Committee leadership shapes oversight of FHA mortgage insurance premiums, credit score requirements, and Fannie Mae and Freddie Mac pricing. A planned share sale of Fannie and Freddie has been widely expected to wait until after the midterms or later. Any of these can change what a borrower pays, in either direction.
Some things will not change
Mortgage rates are driven mainly by inflation, Treasury yields, and the Federal Reserve, not by which party holds the House. Housing supply has support from both parties, with lawmakers on each side backing the ROAD to Housing legislation.
Elections add uncertainty, and uncertainty keeps buyers on the sidelines. Fewer buyers means more room for the ones who are ready.
What This Means for East Austin Buyers
East Austin covers the neighborhoods east of I-35, roughly from the Colorado River north to US-290. It includes ZIP codes 78702, 78721, 78722 and 78723. Homes here range from early 1900s bungalows to new modern infill and the planned Mueller community. Prices in East Austin are running close to the citywide median, and homes are taking about two months to sell.
Source: Redfin, East Austin neighborhood data, September 2026. Redfin measures sale price against the final list price, so its ratio runs higher than the Unlock MLS figure above.
East Austin by ZIP code
| ZIP | Neighborhoods | Recent market |
|---|---|---|
| 78702 | Holly, East Cesar Chavez, Rosewood, Chestnut, Govalle, Johnston Terrace | Closest to downtown; historic bungalows alongside new modern infill |
| 78721 | MLK, Johnston Terrace, Pecan Springs-Springdale | Median $492,287 in Aug. 2026, down 5.7% YoY; 68 median days on market |
| 78722 | Cherrywood, Upper Boggy Creek | Small, mostly older single-family homes near Mueller |
| 78723 | Mueller, Windsor Park, Pecan Springs | Median $549,838 in Sept. 2026, down 11.7% YoY; 59 median days on market |
ZIP figures: Redfin, latest month available. Single-month ZIP medians move with the mix of homes sold, so treat them as a direction, not a price tag.
Where East Austin buyers have the most room
- Homes past 60 days on market. With median days on market above 60, many listings have already been through a price cut.
- New construction. Builders with finished inventory often fund rate buydowns. See our guide to new construction homes in East Austin.
- Property taxes under the new SALT cap. Higher East Austin values mean higher property tax bills, and more of that bill is now deductible if you itemize.
Browse current listings on our East Austin homes for sale page, or read our East Cesar Chavez and Holly neighborhood guide. We live in East Austin, at 18th and McKinley, and we work here every day.
How to Get Off the Fence
- Get pre-approved now so you know your real payment at today's rates.
- Run the numbers with your CPA to see whether itemizing under the new SALT cap makes sense for you.
- Target homes that have been listed a while. Those sellers are often the most willing to negotiate.
- Ask for a seller credit toward points instead of only a price cut, within your loan's concession limit.
- Plan your closing date with the December 31 tax deadline in mind.
Our Buyer Resource Center walks through each step, and you can browse current homes on our Featured Properties page.
Frequently Asked Questions
Is now a good time to buy a home in East Austin?
For buyers whose budget works at current rates, yes. East Austin homes took a median of 63 days to sell in September 2026, and the median sale price was about $541,000, slightly below a year earlier, according to Redfin. Longer market times give buyers room to negotiate price, repairs and seller concessions.
What ZIP codes are in East Austin?
East Austin generally includes 78702, 78721, 78722 and 78723. 78702 covers neighborhoods closest to downtown, such as Holly, East Cesar Chavez and Rosewood. 78723 includes Mueller and Windsor Park.
Is it a buyer's market in Austin right now?
It is close. The City of Austin had 5.4 months of inventory in September 2026, according to Unlock MLS. Six months is the usual threshold for a buyer's market. Homes are closing below list price on average, and sales volume is down from last year, which gives buyers negotiating power.
Should I wait for mortgage rates to drop before buying a home?
No one can promise when rates will fall. If you wait, you may face more competition and fewer concessions when they do. Buying now lets you negotiate while demand is soft and refinance later if rates improve.
How does the One Big Beautiful Bill Act help Austin homebuyers?
It raised the SALT deduction cap to $40,400 for 2026, which lets many Texas homeowners deduct their full property taxes if they itemize. It made the $750,000 mortgage interest limit permanent and restored the deduction for mortgage insurance premiums for households with adjusted gross income of $100,000 or less.
Can the seller pay for my interest rate buydown?
Yes, within limits. On a conventional loan for a primary home, sellers can contribute 3% to 9% of the price toward your closing costs, including discount points, depending on your down payment. The credit cannot exceed your actual closing costs and cannot be paid to you as cash.
Are seller-paid points tax deductible?
They can be. The IRS treats points the seller pays on your purchase loan as if you paid them, so you may deduct them in the year of purchase if you itemize and meet the IRS tests. You must also reduce your cost basis in the home by the seller-paid amount.
Will the midterm elections change homeowner tax benefits?
Not directly. The provisions are already law, and changing them requires both chambers of Congress and the president. A divided Congress could make it harder to extend the higher SALT cap past 2029.
Ready to Make a Move?
Book 30 minutes with Adam Timothy Group. We will look at your budget, current inventory in the East Austin neighborhoods you like, and the concessions sellers are offering right now.
Book a Strategy Call Buyer Resource CenterAdam Timothy Group does not provide tax or legal advice. Tax figures reflect 2026 rules under the One Big Beautiful Bill Act and may not apply to your situation. Consult a qualified tax professional before making decisions. Market data: Unlock MLS, September 2026; Redfin, August and September 2026. Concession limits: Fannie Mae Selling Guide B3-4.1-02. Points: IRS Topic 504. Mortgage rates: Freddie Mac Primary Mortgage Market Survey, week of October 15, 2026.
