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As we close out the first quarter of 2026, the Central Texas economy is navigating a complex mix of encouraging local momentum and broader headwinds shaped by rising energy prices and uncertainty stemming from the conflict in the Middle East. Here's what you need to know.

Housing: Buyer Opportunity is Back

The Austin-Round Rock-San Marcos metro is seeing a meaningful shift. The median home price in March landed at $426,220 — the lowest March median since 2021 — giving buyers an entry point that hasn't existed in years. Pending sales surged 15.4% year-over-year, signaling that buyers are taking notice.

Key takeaway: If you've been sitting on the sidelines waiting for prices to come down, this may be the window you've been looking for. Closed sales are up slightly, inventory sits at 5.5 months, and days on market have edged up to 85 — meaning less competition and more negotiating room for buyers.

Commercial Real Estate: Mixed Signals

The office market in Austin is showing signs of life. According to CBRE's Q4 2025 data, the market recorded over 214,000 square feet of positive net absorption, driven largely by tech sector demand. More than 112 tenants are actively seeking over 4.5 million square feet of space, and the gross asking rate climbed to $48.90/SF — a positive indicator for landlords.

Industrial real estate tells a slightly different story. Vacancy hit an all-time high of 20.4% as a wave of new construction deliveries — nearly 9.5 million square feet in 2025 alone — outpaced demand. The silver lining: net absorption has been positive for 46 consecutive quarters, and asking rents continue to rise.

Key takeaway: Top-tier office space in strong locations is leasing well. Industrial remains fundamentally healthy despite the short-term vacancy spike from new supply.

Development Pipeline: Central Texas Is Still Building

Major projects are moving forward across the region, reflecting continued long-term confidence in the market:

• Georgetown – A 200,000 SF mixed-use development (The Preserve Georgetown) breaking ground this summer
• Austin – An 8-building, 200,000 SF mixed-use project approved in the St. Elmo Arts District
• Leander – A 400,000 SF entertainment and retail destination (The Gathering Place) targeting a 2028 opening
• Round Rock – A 316-unit apartment complex under construction within The District mixed-use development

Energy: A Double-Edged Sword

WTI crude oil prices have surged sharply in recent months, driven by the closure of the Strait of Hormuz and disruption to Middle East refining capacity. This is a direct benefit to Gulf Coast refiners and petrochemical producers, with margins at their highest levels since 2022.

However, rising fuel prices are creating real cost pressures across virtually every other sector. Many businesses expect to pass higher costs on to consumers if elevated prices persist.

Key takeaway: Higher energy prices are a net positive for the energy sector but a headwind for everyone else. Watch fuel costs closely as a leading indicator for inflation and consumer sentiment in the months ahead.

Bankers note that the Middle East conflict has introduced uncertainty around the Fed's rate path, and that previously expected rate cuts may be delayed. Loan volume accelerated in Q1, driven by commercial real estate activity, though loan performance ticked slightly downward.

Agriculture & Drought Concerns

Drought conditions across the Eleventh District worsened during the reporting period, creating headwinds for crop production. While most crop prices rose — helping budget projections — higher fuel and fertilizer costs are squeezing margins. Cattle prices remain elevated but drought is suppressing herd expansion.

The Big Picture

Central Texas continues to demonstrate resilience, with an active development pipeline, renewed housing buyer interest, and a commercial real estate market finding its footing. That said, the environment calls for careful navigation: energy price volatility, elevated mortgage rates, tighter credit standards, and geopolitical uncertainty are all factors to monitor closely in Q2 2026.

Citizens National Bank has been a trusted financial partner in Central Texas since 1900. Whether you're looking to buy a home, grow your business, or discuss what these market trends mean for your financial goals, our team of local lenders is here to help. For more details, check out the full report here.

Sources: Federal Reserve Bank of Dallas Beige Book (April 2026), Unlock MLS March & Q1 2026 Central Texas Housing Report, CBRE Austin Office & Industrial Q4 2025 Research, Austin Business Journal, ConnectCRE.