Single-family home sales in the Austin-Round Rock metropolitan statistical area, or MSA, are down by 1 percent, a trend that one expert attributes to a decrease in housing inventory and a rise in development cost.

Data from the most recent Texas Quarterly Housing report was released Tuesday by the Texas Association of Realtors.

Leonard Guerrero, regional vice president with the Texas Association of Realtors, said because of the limited number of housing options in the Austin proper, potential buyers are beginning to look toward surrounding areas, such as Buda, Kyle, Dripping Springs, San Marcos and Wimberley.

“Because inventory is down in Austin, our buyers in the market area are going to the outside areas,” Guerrero said. “Dirt in the surrounding areas is more affordable and better utilized by developers."

He said this movement of buyers to outside areas is driving up the cost of development in the Austin area.

“The development costs in Austin proper have increased so much that home builders are marketing in the $300,000-plus category,” he said.

Home sales in the Austin-Round Rock area decreased by 1 percent in the third quarter of 2016 to 9,249 single-family home sales, and the median price rose 7.7 percent to $279,900 during the same timeframe. The number of active listings is up 12.4 percent to 7,579.

Months of inventory, which measures the amount of time it would take for all homes on the market to sell, is at 2.8 months for the third quarter of 2016, compared to 2.6 at the same time last year.

“Inventory supply in a balanced or normal market is generally considered 6.5 months of inventory,” he said. “This indicates that given no new properties to the inventory, it would take 6.5 months to deplete the supply completely. So with 2.8 months, we are very thin.”

However, he said the forecast predicts a continued strong market for the Austin-Round Rock MSA. The expected increase in population, combined with the uptick in job creation, will keep the market healthy in the coming months, he said.

“We are not the mom-and-pop town of years ago,” Guerrero said. “We are looking at a strong market for the remainder of this year and into 2017.”

Although prices may be up, interest rates are low, so Guerrero advises buyers to take advantage of the current market.

“Now is a great time to buy; interest rates are incredible,” he said. “We are looking forward to good 2017; it’s a vibrant market and a great place to be—Texas, in general, and Austin, in particular."