Austin’s housing market is in “acute distress” as newly built homes continue flooding the market at the same time as sales plummet in the Texas capital, according to a new study by Parcl Labs.

The former pandemic boomtown has been building more homes than most of the country in the past five years, as demand and prices skyrocketed during the health emergency when so many out-of-state Americans wanted to move to the city.

According to Parcl Labs, which analyzed 300 U.S. housing markets to identify high-growth areas with substantial new construction exposure, Austin is among the top five American cities with the biggest growth in the rate of single-family housing stock since 2019 at 6.87 percent.

The list also included Boise City, Idaho (9.51 percent); Lakeland, Florida (8.30 percent); Raleigh, North Carolina (7.80 percent); Jacksonville, Florida (7.17 percent). At the national level, new construction has grown by a much more modest 1.9 percent since 2019, before the pandemic started.

The problem now is that demand for new homes in Austin has plunged significantly compared to the levels recorded in the booming years of the pandemic. While new construction accounted for 40 percent of sales in early 2021, according to Parcl Labs, in June, they accounted for only 9.7 percent—below the national average.

This steep decline has outpaced the drop in new listings: as of June, 21.6 percent of homes listed for sale in Austin were new builds. According to Parcl Labs, this indicates a “demand cooldown” in the Texas capital. By comparison, the U.S. average for new builds is about 10 percent of listings.

Prices for new builds have also dropped in the city. Parcl Labs experts believe that Austin is facing “a reality check” as the market is seeing an average price cut of 7.23 percent on new builds, “with some properties slashed by up to 31.33 percent, indicating very motivated sellers.”

According to Parcl Labs, Southeast Austin, in particular, has emerged as a hotspot for price reductions. ZIP codes 78747 and 78744 see average cuts of 21.41 percent and 16.98 percent, respectively. The east and northeast areas of the city—ZIP codes 78725 and 78653—are also reporting price cuts exceeding 11 percent.

“This pattern suggests that newer, rapidly developed areas on the outskirts of Austin are facing the most intense price pressures,” Parcl Labs experts wrote.

Newsweek previously reported about entire new neighborhoods being abandoned mid-construction or right after construction by developers as the Austin housing market flipped in favor of buyers.

According to Redfin’s latest data, the median sale price of a home in Austin was $562,750 in June, down 6.2 percent from a year earlier. That same month, 776 homes were sold, down from 1,016 last year.

For Parcl Labs researchers, Austin’s story “is beginning to serve as a cautionary tale for other booming markets. It demonstrates how quickly the tide can turn in the new construction sector, and how even the hottest markets can quickly face the cold reality of oversupply and waning demand.”