How Austin actually brought rents down

In most product markets, transitory supply and demand shocks can spike prices, but as long as there’s open entry to the market allowing elastic supply, prices come back down near marginal supply costs. This is rare in American housing markets because infill supply responses are usually illegal under local growth control laws–but not, per Pew’s new analysis, in Austin, Texas. Austin enjoyed among the highest permitting rates in the country for several years; as in-migration has slowed somewhat, supply finally caught up to demand and rents are back down to pre-pandemic levels in nominal terms and down significantly in real terms and as a share of incomes. Austin’s biggest zoning reforms actually came during the boom, allowing Austin to keep permitting at pre-2019 rates in 2025 despite substantially lower real rents. That said, once rents fall to near construction costs plus a competitive gross margin, development will slow substantially as it has in Minneapolis (where median market rate rents are now at federally subsidized LIHTC levels).