The spring 2025 housing market is showing signs of stability, but affordability and uncertainty continue to shape buyer behavior. While mortgage rates hover around 6.6%, many homebuyers are shifting focus to smaller, more affordable metros in the Midwest and Northeast.
Mortgage rates level off, but uncertainty persists
After peaking at 7.04% earlier in the year, the average 30-year mortgage rate has settled around 6.6%, according to Realtor.com. However, economic uncertainty—driven by fluctuating policy decisions, inflation trends, and the recent pause in U.S.–China tariffs—is weighing on consumer sentiment.
Job concerns are also rising. A recent spike in fears over job security could curb demand as the traditional peak homebuying season begins.
Midwest leads with affordability and climate resiliency
The latest Wall Street Journal/Realtor.com Emerging Housing Markets Index highlights a growing trend: affordable, climate-stable Midwest cities are in high demand.
The top market this quarter is Toledo, Ohio, where:
- The median listing price is $235,000 — nearly $200,000 below the national median.
- Listings are receiving high engagement, with most interest coming from outside the metro area.
- Prices have surged 17.5% year-over-year and 63.7% since pre-pandemic.
Other high-performing markets include Rockford, IL; Canton, OH; Harrisburg, PA; and Fort Wayne, IN. Most top markets boast median home prices under $400,000 and low climate risk exposure, appealing to both retirees and cost-conscious buyers.
First-time buyers face growing challenges
With home prices remaining high and mortgage rates elevated, first-time buyers are increasingly priced out. The average age of first-time buyers hit 38 years in 2024—a historic high—while the median buyer age climbed to 56.
Older buyers and those with equity from previous home sales are dominating today’s market. In many metros, especially in the Northeast, these buyers are sustaining demand for higher-end homes despite affordability pressures.
Inventory returns in Texas and Florida, but demand lags
While Midwest and Northeast metros see rising demand, Texas and Florida markets have cooled:
- Inventory in metros like San Antonio, McAllen, and Cape Coral is up over 40% compared to pre-pandemic levels.
- Despite high supply, prices remain 35% above pre-pandemic norms.
- High climate risk and slowed buyer demand have pushed these metros to the bottom of the spring rankings.
Key takeaway: Value, stability drive spring 2025 trends
Spring 2025’s housing market reflects a clear buyer priority: maximize value in an uncertain environment. Affordable markets with low climate risk and solid economic foundations are gaining attention. While overall activity has steadied, mismatches in supply and buyer preferences will continue to shape market dynamics in the months ahead.
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